September 2008 Ethanol Producer Magazine

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ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008 7

features

insideSEPTEMBER 2008 . VOLUME 14 . ISSUE 9

100 FRACTIONATION A Food and Fuel Technology Bundle

ICM Inc. has proven its dry fractionation technology by colocating a food

processing facility with an ethanol plant. The design firm is now ready to deploy

its technology to dry-grind ethanol plants and, at the same time, quell the

food-versus-fuel debate. By Ron Kotrba

108 USE Rocky Mountain E85

The Colorado Governor’s Biofuels Coalition has accomplished its mission to

increase the use of ethanol and biodiesel. With its help, the state has increased

the number of gas stations offering biofuels from 11 to nearly 100 in 1½ years.

By Timothy Charles Holmseth

116 POLITICS Food, Fuel and Politics

The Grocery Manufacturers Association and others supporting the Food

before Fuel campaign say they aren’t against biofuels and are only concerned

about consumers. The question is: Are the food companies really worried that

consumers are paying more for food, or are they more concerned about their

own profits? By Anna Austin

64 EQUIPMENT Beginning of the Blender Pumps

A group of South Dakota ethanol supporters knew they were onto something

when they came up with the idea to use blender pumps to increase ethanol

consumption. Today, despite a few setbacks, their idea is catching on.

By Erin Voegele

72 INDUSTRY Overcoming E20’s Obstacles

The momentum behind the effort to increase the standard ethanol blend level

from 10 percent to 20 percent was revved up when Minnesota passed a law

requiring that its fuel consist of at least 20 percent ethanol by 2013. Several

tests are required, however, before that can happen. By Kris Bevill

80 PROFILE Good Neighbors

You won’t find any ethanol NIMBYs (Not in My Backyard) in Watertown, S.D.

The Glacial Lakes Energy LLC plant on the edge of this community is proof

that ethanol production can economically benefit rural communities and the

surrounding area. By Susanne Retka Schill

92 TECHNOLOGY Challenge X: The Last Lap

A four-year competition that involved students from engineering programs at

17 colleges and universities could result in some real-world applications for

automakers. EPM talked with some of the competitors who used ethanol to

fuel their vehicles. By Bryan Sims

Page 92 Page 100 Page 116

© N

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2Novozymes North America, Inc.77 Perry Chapel Church Road · Franklinton, NC 27525 Tel. +1 919-494-3000 · Fax +1 [email protected] · www.novozymes.com

If squeezing the last bit of ethanol from your corn is important to

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departments contributors124 RISK

Six Traits of Successful Ethanol Producers: Keys to Effective Risk ManagementEscalating corn price volatility and legislative uncertainty, among other concerns, is creating market conditions that require detailed attention to risk management. Profitable ethanol producerstypically share some common traits. By Tom Wapp

130 POLICY

Measuring the Total Carbon Footprint of Biofuels Through Life-Cycle AnalysisThe United States and European Union have determined ways of measuring the greenhouse gasemissions of biofuels. The biggest question may be how the varying standards impact international biofuels trade and production. By Kenneth J. Markowitz, Bernd G. Janzen and Emily C. Schilling

134 CONSTRUCTION

Applying Lessons Learned from Previous Construction SlowdownsWhile the primary causes may vary, the power industry construction slowdown of the mid-1990soffers a plethora of lessons for the current state of the ethanol industry. While problems may exist,proper planning may provide a bright horizon. By Colin Reid

insideSEPTEMBER 2008 . VOLUME 14 . ISSUE 9

11 Advertiser Index

14 The Way I See ItBy Mike Bryan

Bioenergy Takes Emphasis over Biofuel

15 Letter to the Editor

20 Business & People

24 Commodities

26 A View from the HillBy Bob Dinneen

Americans See Through the Blame

27 RFA Update

28 eBIO InsiderBy Robert Vierhout

Food for Thought

30 Industry News & BIObytes

40 Plant Construction List

48 Our PlantBy Craig A. Johnson

Demonstrating Speed, Accuracy

50 In the FieldBy Susanne Retka Schil l

Matching Corn Buyers, Sellers Electronically

52 Up FrontBy Kris Bevil l

Passionate About Enzymes

54 Flex FactorBy Timothy Charles Holmseth

Adkins Energy, EPIC Team Up

56 BusinessBy Bryan Sims

Venture Capital Remains Robust

58 DriveBy Toni Nuernberg

Blender Pumps Offer Freedom of Choice

60 Legal PerspectivesBy James Lodoen and George Singer

Financial Restructuring Alternatives

for Bioenergy Companies

138 Events Calendar

140 EPM Marketplace

Ethanol Producer Magazine: (USPS No. 023-974) September 2008,Vol. 14, Issue 9. Ethanol Producer Magazine is published monthly.Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND58203. Periodicals Postage Paid at Grand Forks, North Dakota andadditional mailing offices. POSTMASTER: Send address changes toEthanol Producer Magazine/Subscriptions, 308 Second Ave. N.,Suite 304, Grand Forks, North Dakota 58203.

BPA Worldwide Membership Applied for October 2006

on the webEthanolProducer.com’s most-read Web exclusive news stories for July

1. Judge rules on Bateman Litwin lawsuit

2. VeraSun postpones VE30 launch

3. Brazil launches campaign to remove ethanol tariff

4. Mascoma advances plans for Michigan plant

5. U.S. Biofuels Exchange establishes marketplace

6. RIN compliance surprisingly low

7. Biomethodes, Virginia Tech sign agreement

8. ABF, Mascoma to develop cellulosic ethanol

9. Airgas to colocate carbon dioxide plant

10. WASDE: Corn cash, future prices remain strong

And add great dividendsto your Ethanol Plants.

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2009 InternationalFuel Ethanol Workshop & Expo

Advanced Biofuels Workshop

Afton Chemical Corp.

Agra Industries Corp.

American Petroleum Institute

American Railcar Industries Inc.

Anhydro Inc.

Aqua Power Inc.

Aquatech International

Barr-Rosin Inc.

BBI International CommunityInitiative to Improve EnergySustainability (CITIES)

BBI Project Development

Best Energies Inc.

BetaTec Hop Products Inc.

Biodiesel & Ethanol 101 DVDs

Biofuels AustralasiaBiofuels CanadaBiofuels Recruiting

Biomass MagazineBuckman Laboratories Inc.

Burns & McDonnell

Calbrandt

Cereal Process Technologies LLC

Check-All Valve Mfg. Co.

Chemineer Inc.

Christianson & Associates PLLP

Clifton Gunderson LLP

Coverall Building Systems

Crown Iron Works Co.

dbc SMARTsoftware Inc.

Delta-T Corp.

Distillers Grains QuarterlyEaton Filtration

Eisenmann Corp.

Electro Sensors

ethanol-jobs.com

Ethanol Promotion & Information Council

Exothermics Inc.

Fagen Inc.

FCStone LLC

Fermentis

Energy from Biomass and Waste Expo & Conference

Genencor International Inc.

GreenShift Corp.

89

78

55

33

53

4

6

94

23

31

128

62, 91, 129 & 149

104

34

70

106

114 & 125

99 & 136

84 & 110

63

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35

121

111

112

36

68

71

113

79

59

86 & 150

61

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15, 88 & 122

90

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123

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Ad Index

HEMCO Industries

ICM Inc.

Indeck Power Equipment Co.

International Distillers Grains Conference and Trade Show 2008

Interstates Cos.

Intersystems Inc.

ITT Goulds

Kennedy & Coe LLC

Lallemand Ethanol Technology

Mapcon Technologies Inc.

McC Inc.

Metso Automation

Nalco Co.

National Ethanol Conference

Natwick Associates Appraisal Services

Nestec Inc.

Nexen Marketing USA Inc.

Novozymes

Ortman Ethanol Water Resources

Paragon Enterprises LLC

PhibroChem

Pioneer Hi-Bred International Inc.

Poet LLC

Primafuel Inc.

Pro-Enviornmental Inc.

R&R Contracting Inc.

RailWorks Track Systems Inc.

Resonant BioSciences LLC

Renewable Fuels Association

Robert-James Sales Inc.

SafeRack LLC

Salco Products Inc.

Seneca Waste Solutions

Siemens Energy & Automation Inc.

Smar International Corp.

Spraying Systems Co.

Strongform Nationwide Industrial Builders

Sulzer Chemtech USA Inc.

TDC Dryers

Trico TCWind Inc.

Vaperma Inc.

Victory Energy Operations LLC

Vogelbusch USA Inc.

Volkmann Railroad Builders Inc.

WIKA Instruments Corp.


105

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45

120

107

43

57

42

44

18

22

98

75

77

76

8

118

32

29

19

152

96

46

102

83

97

39

151

131

82

119

38

103

127

95

66 & 67

87

135

47

126

132

133

137

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EDITORIAL

Jessica Sobolik Managing [email protected]

Dave Nilles Contributions [email protected]

Rona Johnson Features [email protected]

Ron Kotrba Senior Staff [email protected]

Jerry W. Kram Staff [email protected]

Susanne Retka Schill Staff [email protected]

Bryan Sims Staff [email protected]

Kris Bevill Staff [email protected]

Timothy Charles Holmseth Staff [email protected]

Erin Voegele Staff [email protected]

Anna Austin Staff [email protected]

Suzanne H. Schmidt Staff [email protected]

Ryan C. Christiansen Staff [email protected]

Hope Deutscher Online [email protected]

Jan Tellmann Copy [email protected]

Craig A. Johnson Plant List & Construction [email protected]

Amber Armstrong E-Media [email protected]

ART

Jaci Satterlund Art [email protected]

Sam Melquist Graphic [email protected]

Elizabeth Slavens Graphic [email protected]

Jack Sitter Graphic [email protected]

PUBLISHING & SALES

Mike Bryan Publisher & [email protected]

Kathy Bryan Publisher & [email protected]

Joe Bryan Vice President of Media & [email protected]

Tom Bryan Vice President of [email protected]

Matthew Spoor Sales [email protected]

Howard Brockhouse Senior Account [email protected]

Clay Moore Account [email protected]

Jeremy Hanson Account [email protected]

Chip Shereck Account [email protected]

Tim Charles Account [email protected]

Chad Ekanger Account [email protected]

Marty Steen Account [email protected]

Marla DeFoe Advertising [email protected]

Jessica Beaudry Subscriptions [email protected]

Jason Smith Subscriber Aquisition [email protected]

Erika Wishart Administrative [email protected]

Christie Anderson Administrative [email protected]

Nicole Zambo [email protected]

HOW TO REACH US

LETTERS TO THE EDITORWe welcome letters to the editor. Send your letter to:

Ethanol Producer Magazine Letters, 308 Second Ave. N.,

Suite 304, Grand Forks, ND 58203 or e-mail to [email protected].

Letters should include the writer’s full name, address

and telephone number, and may be edited for purposes of clarity and space.

SUBSCRIPTIONSEthanol Producer Magazine is now free of charge to everyone with the exception of

a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico.

To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment

(checks made out to BBI International) to:

Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

You can also fax a subscription form to (701) 746-5367.

CUSTOMER SERVICE AND CHANGE OF ADDRESSFor service, please use our Web site at www.EthanolProducer.com. You can also call (866) 746-8385, or write to:

Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

BACK ISSUES AND REPRINTSSelect back issues are available for $3.95 each, plus shipping. To place an order, contact Subscriptions at (701) 746-8385

or [email protected]. Article reprints are also available for a fee. For more information, contact Christie

Anderson at (701) 746-8385 or [email protected].

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

COPYRIGHT © 2008 by BBI International


ETHANOL PRODUCER MAGAZINE SEPTEMBER 200814

here are marvelous options opening up to the renewable energy industry. Ethanol hashelped carve a path forward to a future based in bioenergy. It’s an industry thatexpands far beyond the borders of ethanol and biodiesel.

Bioenergy covers such a vast array of new opportunities—anaerobic digestion, gasification,pyrolysis, algae, and combined heat and power, to mention a few. What is so exciting about thesetechnologies is that many of them can be incorporated into the present ethanol industry toimprove operating efficiencies, reduce production costs and improve our carbon footprint.

Some plants, such as Corn Plus LLLP in Winnebago, Minn., have already begun thisprocess. General Manager Keith Kor and the board of Corn Plus have already incorporated afluidized bed boiler, along with other advanced technologies, that will provide them with the ability to more effectively rideout the fluctuations in feedstock and energy commodity markets.

The development of smaller ethanol process systems that would provide fuel for individual communities is also in thenear future. More states are demanding that landfill gas be captured and used to create power. Both federal and state pro-grams are quickly being developed to help communities find ways to not only reduce their energy use, but to become moreenergy independent.

In short, the renewable energy industry has turned a corner, embarking on a new and exciting path, likely not fraughtwith as much opposition as we have most recently faced. The years ahead will see communities and private industry focusedon greater sustainability and the capture of valuable carbon credits. The ethanol industry will no longer be judged strictly onits efficiency, but likely on a carbon number assigned to each production facility. This carbon number will be based on thetype of feedstock used, the distance the feedstock is from the plant and how it’s shipped.

To be sure, how we embrace and incorporate these new and evolving technologies—bringing us closer to carbon neu-trality—will be a major part of our continued success.

That’s the way I see it!

The Way I See It

Bioenergy Takes Emphasis over Biofuel

Mike BryanPublisher & CEO

[email protected]

T


Letterto the

Editor

think your article in the August issue (“Where in theNortheast is E85?”) was excellent. I was not awarethat New York was among the top E85-selling states.

I live near Albany, and I fill up with E85 whenever I'm intown. Unfortunately, there is a real lack of E85 stations inother parts of the state, especially western New York, whichironically has an ethanol plant.

I am currently commuting between Boston and myhome, and I can attest to the general lack of E85 in theNortheast. However, there is now a station in Chelsea, Mass.,which would be much closer to New Hampshire thanAlbany. Unfortunately, for me to get there, I would have topay a toll to cross the Tobin Memorial Bridge, which wouldnegate any savings.

Chris KeatingKinderhook, N.Y.

I

Correction from our August 2008 issue:In the feature titled “Breaking the Catalytic Barrier to Biofuels,” it incorrectly

stated that Christopher Jones was working with Range Fuels. He will be

working on a project to develop and improve heterogeneous catalysts used

for transforming synthesis gas into cellulosic ethanol, but the project isn’t in

collaboration with Range Fuels.

GreenShift is the original inventor and industry pioneer of Corn Oil Extraction technology.With over 40,000 hours of operational run time on our systems and years of know howintegrating extraction technology into corn ethanol plants, GreenShift has established itstechnology leadership and proven its reliability.

Participating in GreenShift’s corn oil extraction program is guaranteed to bring you the highestreturn, on the shortest lead time, at the lowest risk, and for the least amount of capital deployed.

Take advantage of GreenShift’s turn-key Corn Oil Extraction and Biodiesel Productioncapabilities and chose between extracting oil for conversion at our new fully operational biodiesel

facility or extracting oil and producing biodiesel onsite at your facility.

Generate over $8 million in additional income for a 50 million gallon per year facilityand over $12 million for a 100 million gallon per year facility.

Capitalize by purchasing our Corn Oil Extraction System and Co-located Biodiesel Production toreceive the greatest return on investment while increasing your renewable fuel production.

Removing oil from your DDG can also be expected to enhance dryer operationwhile reducing drying costs, reduce emissions of greenhouse gases and to

enhance the marketability of your remaining DDG.

www.greenshift.com

Contact GreenShift for more information aboutthe future of Renewable Fuel production.

GreenShift Corporation1 Penn Plaza, Suite 1612 • New York, NY 10119phone: 1 888 ETHANOIL • email: [email protected]

Established Technology Leadership.Proven High Yields. Consistent Production. Fully Automated.

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See product label for provisions of this mark. MARKET CHOICES is a certification mark used under license from ASTA.

^

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For ethanol plants looking for higher returns, Pioneer® brand High Total Fermentables (HTF) ethanol hybrids help farm operatorsdeliver more grain with more ethanol per bushel. The Pioneer QualiTrakSM system accurately predicts ethanol yield potential (EYP)for each load of corn delivered to an ethanol plant. QualiTrak reports the EYP in “gallons per bushel” and has found variation amongdifferent hybrids ranging up to 7 percent.

Many HTF ethanol hybrids contain the Herculex® insect protection traits, helping reduce insect damage and the presence of moldsand mycotoxins. This protection helps ensure a more consistent supply of high-yielding, high-quality grain.

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Judge issues ruling inBateman Litwin lawsuit

In the pending lawsuit filed by Dutchenergy company Bateman Litwin NV againstRobert and Bibb Swain, cofounders ofVirginia-based ethanol process technology firmDelta-T Corp., a magistrate judge ruled in favorof the Swains, recommending that the fraudaspects of the case be dismissed. The judgealso recommended that the Swains be allowedto move forward with defamation claimsbrought against Bateman Litwin and certaincompany executives. The lawsuit was originallyfiled in the U.S. District Court for the EasternDistrict of Virginia on Dec. 21, 2007, byBateman Litwin, which claimed the Swainsmisrepresented Delta-T’s financial status duringthe July 2007 sale of the company. EP

Business

Business&PeopleEthanol Industry Briefs

BUSINESS&PEOPLE

VeraSun wins award, postpones VE30 launch

Brookings, S.D.-based ethanol producerVeraSun Energy Corp. received an IowaGovernor’s Volunteer Award for its outstand-ing contribution through volunteer service.The company was selected for the award by theIowa Department of Education because ofthe assistance that VeraSun Albert City inAlbert City, Iowa, gave the Albert City-Truesdale Community School District.VeraSun helped construct a playground, pro-vided financial support for school activities andpurchased equipment for the school. Theaward was presented during a June 12 ceremo-ny in Storm Lake, Iowa.

In other VeraSun news, the company hadplanned a June 30 launch of its trademarkedVE30 fuel, a blend of 30 percent ethanol and70 percent gasoline, at Olson Oil Co.’s Get-N-Go station in Sioux Falls, S.D. However, thelaunch was postponed indefinitely. EP

To be included in Business & People, send information(including photos or illustrations if available) to: IndustryBriefs, Ethanol Producer Magazine, 308Second Ave. N., Suite 304, Grand Forks, ND 58203. Youmay also fax information to (701) 746-5367, or e-mail it to [email protected]. Please includeyour name and telephone number in all correspondence.

Share your Industry Briefs

Iowa company invests inDDGS drying technology

Iowa Corn Opportunities LLC, a compa-ny owned by the Iowa Corn GrowersAssociation, has made an investment inCellencor Corp.’s microwave drying process fordistillers grains. The microwave technologyreduces drying time by dehydrating the feed-stock from the inside out, saving ethanol pro-ducers up to 20 percent of operating costs.Although Cellencor’s main focus is the corn-based ethanol industry, the system also driesother feedstocks. EP

Company markets dust collector to ethanol producers

Imperial Systems Inc. in JacksonCenter, Pa., has begun marketing its BigRound Filter dust collector to ethanol pro-ducers. The company has supplied numer-ous baghouses to customers in the grain andseed industry, and has identified a need fordust collection in ethanol plant receivingfacilities, according to Imperial Systemsspokeswoman Tricia Craig. The Big RoundFilter can process 75,000 cubic feet of airper minute, and the company claims thedust collector is simpler and more ruggedthan other systems. It includes a high-entryinlet for lighter loading applications thatwould be used in distillers dried grains load-out areas. EP

Companies dole out post-FEW accolades

At the 2008 International Fuel EthanolWorkshop & Expo, Seattle-based HarrisGroup Inc. made a “spirit of giving” donationto a charity in the name of a special drawingwinner. This year’s recipient of the $500 dona-tion was Wes Bolsen, vice president of busi-ness development at Coskata Inc. He request-ed that the money go to Menlo Park, Calif.-based Kingdom First Ministries, a nonprofitorganization that provides Christian knowl-edge at Stanford University and the surround-ing communities.

In addition, Novozymes was selected toreceive the award for Best Booth at the FEWexpo. Connie Provick, trade show manager atBBI International Inc., said Novozymes’booth was chosen through an informal poll ofexhibitors and expo attendees. EP

Cellencor's mobile microwave test unit was on display

at Corn Plus LLLP in Winnebago, Minn., in March.

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Novozymes' booth was named the best at the FEW.

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BUSINESS&PEOPLE

Sponsored by

Business

Renova reorganizes U.S. operations

After filing for Chapter 11 bankruptcyprotection in late June, Renova Energy PLCsaid it expects to continue operations of itsBoise, Idaho-based marketing and distributionfirm Renova Energy Inc., and its ethanol pro-duction facility Wyoming Ethanol LLC inTorrington, Wyo. After filing for bankruptcy,Renova received $4 million in operating capitalto continue operations while reorganizationcontinued. Company Chairman Chris Thomasattributed the financial crisis to cost overrunson now-suspended construction of its 20MMgy ethanol plant in Heyburn, Idaho. Thecompany is in negotiations for the sale of thepartially constructed plant. EP

Aventine sells auction rate securities

Pekin, Ill.-based Aventine RenewableEnergy Holdings Inc. has sold $127.2 mil-lion per value of its student loan-based auc-tion rate securities to various unnamed par-ties for cash totaling approximately $97.1million. In its first quarter of 2008,Aventine recorded an impairment charge of$21.6 million related to the remaining auc-tion rate securities it held March 31 that itdidn’t report to the U.S. Securities andExchange Commission in time. Taking intoaccount the most recent sale, the companywill still record an $8.5 million loss on thesale of those securities. According to thecompany, the funds received from the saleof its auction rate securities will be used tofund plant construction. EP

White Energy contractsPavilion Technologies

White Energy Inc. has contracted withPavilion Technologies, a company owned byRockwell Automation Inc., to utilize Pavilion’sModel Predictive Control technology in orderto increase production and efficiency at WhiteEnergy’s three ethanol plants in Russell, Kan.;Hereford, Texas; and Plainview, Texas. TheMPC system will create comprehensive modelsof the facilities that will predict and analyzeplant process steps in order to increase yieldsand reduce energy consumption, ultimatelymaximizing plant performance. Pavilion hasinstalled the MPC in more than 30 ethanolplants. EP

HPD wins evaporator contracts

HPD, a Veolia Water Solutions &Technologies company with offices inPlainfield, Ill., and Bilbao, Spain, will pro-vide evaporation systems for AbengoaBioenergy’s proposed ethanol plant inRotterdam, Netherlands, and AgProcessing Inc.’s ethanol plant in Hastings,Neb. The stillage evaporation systems willemploy a three-effect falling film evapora-tion train followed by a high-solids concen-tration unit to produce up to 35 percenttotal solids entering the dryers for theAbengoa system and up to 50 percent forthe AGP system. A higher syrup concen-tration sent to the dryer significantlydecreases natural gas consumption andincreases throughput of distillers driedgrains with solubles. EP

Poet launches publicationSioux Falls, S.D.-based ethanol producer

Poet LLC has launched a new quarterly tradepublication, Vital. Mailed on July 7, the secondissue was circulated to more than 21,000 readers,including investors, government officials, grainproducers and community members. The publi-cation will include community profiles, industryinformation and environmental advancements.It will also cover issues concerning the future ofthe ethanol industry. Vital can be viewed onlineat www.poet.com/vital. EP

Renova owns Wyoming Ethanol LLC in Torrington,

Wyo.

DOE creates E85 station locator

The U.S. DOE has created an alternativefueling station locator on its Alternative Fuelsand Advanced Vehicles Data Center Web site,which among other fuels includes internation-al public and private E85 fuel stations. For thepast 14 years, the center has been collectingdata for the tool, which allows a user to searchby address or zip code. Users in the UnitedStates have advanced options, such as a map-ping feature that constructs a route from aspecified starting point to a desired destinationand provides information on the closest E85stations along the way. To access the tool, visitwww.eere.energy.gov/afdc/fuels/stations.html. EP

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The second issue of Vital was mailed July 7.


VeraSun chairman resigns Brookings, S.D.-based ethanol produc-

er VeraSun Energy Corp. announced July 1that Gordon Ommen had resigned as thecompany’s chairman. Ommen, who for-merly served as U.S. BioEnergy’s presidentand chief executive officer, was namedchairman during the March merger of thetwo companies. He has been succeeded byDuane Gilliam, who joined VeraSun’s boardin 2005. EP

People

Range Fuels makes additions

Broomfield, Colo.-based Range Fuelshas appointed former Federal RegulatoryCommission Chair-man Pat Wood to itsboard of directors. Hehas 20 years of energyregulation and infra-structure developmentexperience.

In addition, JohnWinter joined the com-pany as the new vicepresident of processengineering. Previous-ly, he worked forEvergreen Energy asvice president of engi-neering. He has 30years of experience inoperating gasificationplants, research and development, andprocess engineering, including processdesign and development optimization. “Iliked what I saw, touched and heard,” hesaid, describing his first impression ofRange Fuels. EP

Emalfarb rejoins DyadicMark Emalfarb, who was fired from

his position as chief executive officer ofDyadic International amid a tax scandal lastyear, has been reinstated as chairman andCEO. The decision came June 20 atDyadic’s court-ordered annual shareholdermeeting in Palm Beach Gardens, Fla., wherea group of shareholders led by Emalfarbrestructured the board in their favor. EP

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Mascoma, ABF advanceMichigan plant plans

Boston-based Mascoma Corp. is collab-orating with Associate British Foods to devel-op advanced conversion methods for use incellulosic ethanol production. Mascoma willfocus on engineering, fermentation andprocess development, while ABF will work onenzyme development and management of theenzyme supply chain. The collaborative goal isa simplified saccharification and fermentationprocess, which will require less capital invest-ment and lower operating costs. Mascomarecently selected Michigan as the site of itsfirst commercial-scale cellulosic ethanol plant.The company expects to have a full-scale plantoperational by 2012. The exact location wasnot yet finalized. EP

Business

Fagen teams with FrontlineLeading ethanol plant design/builder

Fagen Inc. and Frontline BioEnergy LLChave announced a new partnership. “KickingGas with Biomass” is one of its slogans, andexecutives of both companies are hoping tohelp new and old ethanol plants significantlyreduce natural gas consumption for processheat and steam, while laying the foundationfor future ethanol production from biomass.Frontline, a biomass gasification systemsprovider, is partly owned by Chippewa ValleyEthanol Co., a 47 MMgy ethanol plant inBenson, Minn., which installed a Frontlinegasifier currently powered by wood waste.CVEC General Manager Bill Lee said Fagensaw an opportunity to make the ethanol plantsit has built better by incorporating Frontlinetechnology. EP

Winter

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COMMODITIES REPORT

July 18—At press time, we were in the midst of the firstmeaningful natural gas and oil price decline of 2008. On July 7 theopening natural gas market price was $13.50/MMBtu. On July 17the closing natural gas market price was $10.64/MMBtu, a 21 per-cent drop. Crude oil also experienced a drop, although not as dra-matic. On July 7 crude opened at $144.27 per barrel and closed July17 at $129.29 per barrel, a 10 percent drop.

The previous “big move” down for natural gas this year wasmid-March when the market dropped from $10.23/MMBtu to$9.02/MMBtu. By mid-April prices rallied, reaching a high of$13.57/MMBtu in early July. Is the recent market decline for real

and does it represent the beginning of even lower prices, or will weagain rally back and blow through the high?

Unfortunately, I think the answer rests to a greater degree onwhat happens with oil prices than with underlying natural gas mar-ket fundamentals. Arguably, natural gas market fundamentals are asgood as or better than one year ago. Liquefied natural gas receiptsare off somewhat. However, incremental domestic productionappears to have more than made up the short fall. In addition,weather has been moderate. In spite of relatively good fundamen-tals current natural gas market prices are 63 percent higher thanone year ago. The market closing price on July 18, 2007, was$6.53/MMBtu.

Oil prices are 72 percent higher than one year ago. The July17, 2008, price was $129.29 per barrel and the July 18, 2007, pricewas $75.05 per barrel. The relevant question becomes: Where areoil prices going? The answer: It depends. If the U.S. dollar contin-ues to weaken and the world economy continues to be robust, oilprices will likely remain high. However, if the U.S. dollar ralliesand/or the world economy falters, oil prices may decline further.

Our recommendation is to begin looking at coverage for thisfall and next winter, preferably using option structures. EP

Casey Whelan, vice president of strategic initiatives, can be contacted [email protected].

Finally, some price relief

Natural Gas Report By Casey Whelan, U.S. Energy Services Inc.

CRP, input costs raise ’09 concerns

Corn Report By Jason Sagebiel, FCStone

July 18—The corn market experienced a massive sell-off into earlyJuly as funds liquidated financial commodities. Improved crop andweather conditions allowed traders to feel that the threat from the earlyJune floods has eased. Speculators became sellers in this quick marketenvironment.

The USDA July supply and demand report was released, and asexpected carry-out increased for both old crop and new crop corn. Oldcrop corn carry-out increased 165 million bushels versus last month.New crop corn carry-out increased by 160 million bushels versus theprevious estimate of 673 million bushels. The June 30 plantings reportplaced the latest projection at 87.3 million acres, which equates to 78.9million harvested acres. The USDA reduced the yield by 0.5 bushels to148.4 bushels per acre. So why did the carry-out increase? That was dueto a reduction in corn use in the ethanol and feed sectors. Ethanol wasprojected to use 50 million less bushels of corn in both the current andnext marketing years. The feed sector is expected to consume an addi-tional 50 million bushels versus the previous estimate.

The big concerns going into the 2009-’10 crop year is what will theUSDA do with Conservation Reserve Program acres and how muchwould actually return to production agriculture? If so, what

grain/oilseed commodities will be impacted? This is why new cropcorn prices in 2009 will become a potentially volatile situation. With therecent price devaluation in corn and inherent higher input cost for cornproduction, what will the financial situation be for producers to make adecision going into next year’s planting season? Therefore, December,January and February prices may trigger a high volatility scenariobetween corn and soybeans. EP


COMMODITIES REPORT

DDGS Report By Sean Broderick, CHS Inc.

Ethanol Report By Spencer Kelly, OPIS

July 18—With petroleum marketsfinally appearing to end its 2008 bull runand corn also coming back down toearth, any supportive sentiment forethanol seemed to disappear as Julyethanol markets turned sharply loweracross the country.

The post-Independence Day rever-sal was most severe in New York Harbor.Driven by cargo delays, empty tanks andimmediate blending needs, spot ethanolprices for July shot up to $3.25 per gallongoing into the long holiday weekend.However, by late July, Harbor ethanolthreatened to break below $2.70 per gal-lon—a 55 cent reversal in a little morethan two weeks.

Market sources explained that oncerail problems were worked out from thevestiges of Midwest flooding along witharrival of overseas material, big buying

turned to big selling, reportedly led by apetroleum major before others joined in.

Still, losses were not confined toNew York. Chicago ethanol for July trad-ed to the lower $2.40s per gallon headinginto the latter part of the month, repre-senting a price drop of 40 or more centssince June. August and fourth-quarterprices mirrored prompt-month losses,often several cents under July.

At Midwest racks, ethanol pricesalso started to come down but remainedgenerally higher than at the end of June.Iowa ethanol racks, averaging $2.90 pergallon by late July, dropped about 7 centsfrom its highpoint over the month, butstill held a 3 cent advantage versus theend of June. EP

For more information, contact OPIS Ethanol& Biodiesel Information Service at (888)301-2645.

Ethanol in midsummer swoon

Source: OPIS

Source: U.S. Energy Services Inc.

*Central Valley Source: CHS Inc.

July 21—As mid-July hit, distillersgrains prices, which ratcheted up withthe rally in corn futures, were falling withthem as well. Ingredient buyers, many ofwhom jumped in as corn looked to easi-ly rally to $8 per bushel, were sitting onthe sidelines buying only what they need-ed and as near term as they could safelymanage. Any conversation of forwardbuying was accompanied by questions ofdiscounts. The lack of forward buyingwas unprecedented, both in near-termand new-crop slots. Generally, in midsummer, 50 percent to 70 percent of thenext year’s new crop production hasbeen sold. This year, it has been estimat-ed that less than 10 percent has beencontracted.

Despite the price uncertainty,export demand remains robust, nodoubt due to the lead time associated

with logistics for the container and bulkbusiness. In the bulk market, Asiandemand will be affected by the spread ofshipping rates from the PacificNorthwest versus the Gulf of Mexico,as distillers grains will most commonlymove in conjunction with corn cargoes.

A lot will depend on the marginstructures for ethanol plants. Many hadtheir summer corn bought early at favor-able numbers and enjoyed the run-up inethanol prices, as it is common for plantsto be in the spot market in the summermonths. Poor margins may lead to slow-downs or shutdowns and will definitelybe on the minds of those plants stillunder construction. In the end, there willbe no doubt that supply—the excess orlack thereof—will be as much of aninfluence on prices as the Chicago Boardof Trade. EP

Source: FCStone

Prices dip with corn during mid-summer lull

REGION

West Coast

Midwest

East Coast

SPOT

342.733

336.399

330.268

RACK

359.936

345.792

345.357

RETAIL

441.958

402.924

406.097

April 2008

March 2008

April 2007

562,000*

561,000

391,000

REGION

West Coast

Midwest

East Coast

SPOT

295.658

280.605

295.684

BULK TRUCK (rack)

294.21

284.08

- - - -

SPLASH/TOP OFF (rack)

297.76

287.772

328.87

DATE

July 16, 2008

June 16, 2008

July 16, 2007

CLOSE

6.09 1/2

7.46 3/4

3.34 3/4

LOW

6.08 1/4

7.38 1/2

3.34 3/4

HIGH

6.37 1/4

7.72 1/4

3.38

LOCATION

Minnesota

California*

Chicago, Ill.

Buffalo, N.Y.

Central Florida

AUG. 2008

165

202

155

163

195

JULY 2008

175

230

165

170

205

AUG. 2007

90

134

103

115

131

Source: OPIS

NYMEX

N. Ventura

Calif. Border

JULY 18, 2007

6.53

6.06

5.99

JULY 18, 2008

10.66

10.12

10.42

JUNE 19, 2008

12.87

11.67

12.36

Regional Ethanol Prices (Monthly averages in cents per gallon)

Regional Gasoline Prices (Monthly averages in cents per gallon)

DDGS Prices ($/ton)

Corn Futures Prices (September corn, $/bushel)

Cash Sorghum Prices ($/bushel)

Source: Sorghum Synergies

Natural Gas Prices ($/MMBtu)

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

*all-time monthly high Source: U.S. Energy Information Administration

Superior, Neb.

Beatrice, Neb.

Sublette, Kan.

Salina, Kan.

Triangle, Texas

Gulf, Texas

JULY 20085.07

5.12

5.27

5.12

5.39

5.16

JUNE 20086.19

6.44

6.39

6.44

6.61

6.77

JULY 20072.93

3.03

2.71

3.23

2.95

3.41


By now, you’ve heard the same lines over and over: Ethanol is causing the rise in

food prices. Corn is being diverted to ethanol production which means less food for the

world’s hungry. Milk over $4? It must be ethanol’s fault.

Even the Organization of Petroleum Exporting Countries has jumped into the fray.

President Chakib Khelil recently commented that ethanol is causing a 40 percent rise in

gasoline prices. How’s that for manufactured hysteria? Coming from an organization that

represents those who most profit from high oil prices, his figures definitely seem dubi-

ous. He has yet to offer any explanation for the method which he employed to arrive at

this percentage.

Have you ever wondered, though, if those words were actually sinking in? Does

your neighbor actually believe that his or her eggs cost double what they did last year

due solely to the increased production of biofuels? Are biofuels the pariah OPEC claims?

According to a new poll, the answer is no.

Democratic pollsters Greenberg Quinlan Rosner Research and Republican poll-

sters Public Opinion Strategies polled 1,200 registered voters from June 23 through July

1 about the use and impact of ethanol on the economy. By an overwhelming factor of 2

to 1, the voters responded that they are supportive of increasing the use of ethanol.

That’s right. Despite well-funded and coordinated anti-ethanol campaigns, they have failed to persuade the

American people into believing their rhetoric. Indeed, the agreement on ethanol stretches across party and economic

divides to unite Americans from all sections of life.

“Asked if they favor or oppose continuing to increase use of ethanol, an impressive 59 percent come out in favor,

while just 30 percent oppose,” according to the poll results. “Support is even higher (63 percent) among environmental-

ists. Men and women, older voters and younger voters, high school educated and college graduates, and voters from

all regions in the country support this alternative fuel. Most impressive, though, at a time when Democrats and

Republicans cannot seem to agree on anything, they agree on the increased use of ethanol.”

The poll also revealed that half of Americans blame oil for the high cost of food. Leaders of oil-producing nations

and even some lawmakers here at home have worked tirelessly to propagate misinformation at a time when lies like this

become more dangerous every day. However, remarkably, fewer than 1 in 10 voters actually blame ethanol for higher

food prices, the poll found.

The public cannot be fooled. The poll showed that Americans are more likely to support a candidate for president

who supports the increased use and production of biofuels than a candidate who does not.

The American people have always shown that in times of great stress and sadness they can persevere. Clearly,

they have seen through massive public relations campaigns to the truth.

Those are some words to let sink in.

Bob DinneenPresident and CEO

Renewable Fuels Association

VIEWFROMTHEHHIILLLL

Americans See Through the Blame


Dinneen

RFAUPDATE

Industry leaders respond to import tariff oppositionResponding to recent calls to repeal the secondary tariff on imported ethanol, U.S. farmer, commodity and

ethanol leaders wrote to President George W. Bush, calling his attention to the importance of a growing ethanol

industry to the nation’s energy, economic and environmental security, and reiterating support for the tariff so that

U.S. taxpayers aren’t asked to subsidize imports.

The American Coalition for Ethanol, Ethanol Producers and Consumers, National Association of Wheat

Growers, National Corn Growers Association, National Farmers Union, National Sorghum Producers and the

Renewable Fuels Association pointed to factors such as oil prices, rising demand, drought and the declining value

of the U.S. dollar as having more effect on the price of food than biofuels. They urged the president to avoid yield-

ing to misguided efforts to blame ethanol for rising prices and to prevent American taxpayers from subsidizing for-

eign products.

“The 54 cent-per-gallon secondary tariff was enacted by Congress in 1980 to offset any incentive for import-

ed ethanol to benefit from the 54 cent-per-gallon tax credit for ethanol blended into motor fuel,” the letter said.

“This tax credit is taken by refiners who blend ethanol into motor fuel, not ethanol producers. The purpose of the

secondary tariff is to protect American taxpayers from subsidizing imports, not to protect domestic ethanol pro-

ducers.”

The entire letter is available at the RFA Web site, www.ethanolrfa.org.

Review of OECD biofuels report confirms significance of oil pricesThe Organization for Economic Cooperation and Development recently released a study, “Economic

Assessment of Biofuel Support Policies,” that estimates the potential worldwide impact of removing all govern-

mental support for biofuels production and use. The report offers a number of recommendations, including a call

on world governments to remove tariffs on biofuels and to consider “alternative policy approaches.”

However, an analysis of the report finds that the data generated do not support the conclusions or policy rec-

ommendations made by the OECD. Nor do the data support OECD officials’ calls for a moratorium on biofuels.

Rather, the data support the conclusions that biofuels policies are having a minimal impact on food prices and

result in reducing greenhouse gas emissions.

The OECD credits ethanol produced from corn starch with a 30 percent reduction in greenhouse gas emis-

sions if using natural gas, and a 50 percent reduction if the facility is biomass-powered. Based on this finding, a

moratorium is unwarranted.

In addition, the modeling included in the report suggests that a 28 percent drop in world oil prices would

cause a 12 percent reduction in world coarse grain prices, underscoring the fact that skyrocketing oil prices are

the largest driver behind increasing grain prices. By contrast, removing biofuels mandates such as the renewable

fuels standard would reduce coarse grain prices by just 1 percent.

More information on the report is available at www.ethanolrfa.org.

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uropean Union regulators are still debating a rathercomplicated and detailed set of rules on how to pro-mote and use renewable energy in transport. The dis-cussion on biofuels sustainability criteria began more

than a year ago, triggered by concerns at the parliamentary leveldue to a proposed law on fossil fuel emissions standards, whichsome politicians suspected would result in high volumes ofimported biofuels from tropical areas. An unholy alliance ofenvironmental non-governmental organizations and the foodindustry, concerned about pressured profit margins, startedcampaigning against biofuels, calling for a worldwide moratori-um on their production. Failing that, they called for the highestpossible sustainability standards.

Their campaign was supported by oil industry life-cycleanalysis showing not only poor greenhouse-gas savings but anegative energy balance for non-sugarcane ethanol. The finalpiece of the anti-biofuels jigsaw was “evidence” of devastatingland use changes. For some, the Searchinger, et al study, “Use ofCroplands for Biofuels Increases Greenhouse Gases ThroughEmissions from Land-Use Change,” was the ultimate argumentto declare biofuels dead. The research undermined the clearthinking of many European politicians. Those who embracethis not-so-rigorous science seem to forget that land use changeeffects are not a new phenomenon.

The perfect storm against biofuels occurred when agricul-tural commodities prices increased. The result was an incrediblybiased discussion on the impact of biofuel production on foodavailability and food prices by international bodies such as theInternational Monetary Fund, World Bank, Organization forEconomic Cooperation and Development, and the Food andAgriculture Organization. Some non-governmental organiza-tions, vested interests, media and politicians happily joined in.

For more than a year we have seen one hostile report afteranother followed by negative and damaging media coverage.However, the tide is turning. More people are now convincedthat the bigger evil is fossil fuel. A crude oil price of more than

$140 per barrel has not missed its effect on fuel and foodprices. Transport emissions also keep rising. Something

needs to be done to curb this,and biofuels are the only short-term solution, which more peo-ple seem to realize.

Fewer than six monthsago a majority of EU politi-cians called for scrapping theproposed EU mandatory targetof biofuels (10 percent by2020). These voices have nowbecome a minority, but thepolitical debate is not over. Theprice to be paid for keeping thetarget is an ever-growing num-ber of rules/criteria on environmental and social-economicsustainability. In the European Parliament 1,500 amendmentson the Renewable Energy bill has been tabled, of which anoverwhelming majority is on biofuels. What we see is a kind ofnumber-throwing contest on greenhouse gas savings, penaltiesfor land use change effects and the level of the biofuels targetthat needs to be achieved by 2020.

In all of this there is at least one potentially positive thing.If biofuels must meet a long list of sustainability criteria, whythen not apply similar criteria to crops grown for food, feed,fiber or fuel? It shouldn’t stop there: if Big Oil clears land fordrilling or shaking up the seabed should we then not apply sus-tainability criteria as well?

Did all those non-governmental organizations, food indus-try groups and politicians open a Pandora’s box, or will biofuelsbecome the first truly sustainable sector setting a standard thatother sectors have no option but to follow? I am convinced thatone day the biofuels industry will be heralded as the industrythat brought about true environmental change. That’s food forthought.

Robert Vierhout is the secretary-general of eBIO, the

European Bioethanol Fuel Association. Reach him at vier-

[email protected]

Food for ThoughtBy Robert Vierhout

E

eBIOINSIDER

BIObytesEthanol News Briefs

Pennsylvania law requires cellulosic E10A Pennsylvania law signed by Gov.Edward Rendell on July 4 as part of thestate’s 2008-’09 budget provides newincentives for cellulosic ethanol produc-ers. The Biofuel Development and In-State Production Incentive Act requiresall gasoline sold in Pennsylvania to con-sist of 10 percent cellulosic ethanol oneyear after in-state production hasreached 350 MMgy and has been sus-tained for three months on an annual-ized basis. Corn-based ethanol require-ments were left out of the legislation.

TMO introduces process demonstration unitTMO Renewables Ltd., headquarteredin the United Kingdom, has opened apilot-scale ethanol plant near Surry,England. The aim of the facility is todemonstrate the core efficacy of theethanol fermentation process usingTMO’s unique thermophilic bacteria, inparticular how quickly the bacteria canproduce ethanol under elevated heat.“The reason the organism is particular-ly useful is that it has a very broadappetite,” said TMO Renewables ChiefExecutive Officer Hamish Curran.

RINSTAR notes low RIN compliance A survey recently conducted by theRINSTAR Renewable Fuel Registryshowed that 81 percent of renewablefuels suppliers are out of compliancewith U.S. EPA regulations. When 134survey participants were asked if theyreceive RIN transfers on the same dayas the product transfer document, asrequired by the EPA, only 19 percentsaid yes. Reports of low complianceprompted the EPA to reissue a warningto ethanol producers and RIN traders,reminding them that fines for noncom-pliance are $32,500 per day.

�continued on page 32

INDUSTRYNEWS


In the 30 days after Texas Gov.Rick Perry submitted a request tothe U.S. EPA asking for a 50 per-cent waiver of the U.S. renewablefuels standard (RFS) for 2008due to high corn prices, the EPAreceived more than 15,000 com-ments from the public. According tothe agency, this was the reason the EPApostponed its ruling, which was scheduled forJuly 23.

Two days before the EPA was scheduledto announce its decision, EPA AdministratorStephen Johnson announced thedelay of the ruling until earlyAugust. According to his press sec-retary Jonathan Shradar, more timeis required to finalize analysis of thecomments received, speak with offi-cials at the USDA and U.S. DOE,and conduct final analysis of theeffect that spring floods had oncrops and food prices. According to Shradar,the analyses have begun. “It’s just pullingthem all together to have a definitive answerthat remains to be done,” he said.

Perry requested the waiver in April. Helater said the request was also a response tothe spring flooding experienced in parts ofthe Midwest. The Energy Independence &Security Act of 2007 requires 9 billion gallonsof ethanol to be consumed in 2008. Perry’srequest would lower that requirement to 4.5billion gallons nationwide.

After the request was submitted, the EPAwas obligated to ask for comments from thepublic for a period of 30 days. An EPAspokesman told EPM that most of the com-ments were repetitive statements submittedby individual members of large companies.However, all comments had to be taken intoconsideration.

The National Chicken Council wasamong the organizations that responded insupport of the waiver. In its letter to the EPA,

the council wrote, “The renewablefuels standard has distorted the

market and has imposed severeeconomic harm on companies inour industry through dramatical-ly higher costs, and is imposing

harm on the general public in theform of higher prices.”Pilgrim’s Pride Corp., the largest

chicken company in the United States, alsowrote to the EPA in support of Perry’srequest. According to the Internal RevenueService, the company’s cofounder Lonnie

Pilgrim gave $100,000 to theRepublican Governor’s Association,of which Perry is chairman.

Several poultry and meat pro-ducers sponsored a study thatblamed the RFS for increasing thecost of biofuel production well pastwhat the marketplace would haveallowed. The report, titled “Biofuel

Support Costs to the U.S. Economy: The KeyRole of the RFS in a Feedstock ShortageScenario” by Thomas Elam, said the wetspring and poor crop predictions prove fur-ther reason to lower the RFS mandate for2008 and that maintaining current levelswould harm the economy.

In support of the RFS, Renewable FuelsAssociation President Bob Dinneen saidPerry’s request was “incomplete, legally insuf-ficient and factually misdirected.” TheAmerican Farm Bureau Foundation said theEPA must consider what an RFS waiverwould mean for the entire nation, not just forTexas. The Biotechnology IndustryOrganization commented in its letter to theEPA that “abandoning the RFS today wouldsend a signal to the market that could under-cut ongoing research and development inbiotechnology.”

—Kris Bevill

RFS waiver in limbo

Perry


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INDUSTRYNEWS

Corn buyers breathed sighs of relief inmid-July as the corn market retreated from the$8-per-bushel spike caused by fears of croplosses due to flooding in the Midwest.

Heavy rains caused flooding in key partsof the Corn Belt with Iowa hit the hardest.Abnormally heavy 10- and 12-inch rains sentIowa rivers over their banks, and heavy rainsfrom the same storm systems left soddencornfields in southern Wisconsin, southeast-ern Illinois and southern Indiana, raising fearsof extensive drown-out. The June rains addedto the market jitters caused by a cool, wetspring that delayed planting across much ofthe Corn Belt.

Trying to gauge the extent of the dam-age, the USDA’s National AgriculturalStatistics Service reinterviewed approximately1,200 farmers June 23-25 to supplement datacollected in the normal survey procedure forthe June Grain Stocks and Acreage Report.Because the flood damage didn’t affect thenumbers reported by the USDA as much asexpected and there was a slight increase incorn planting from the acres reported in thespring planting intentions report, the cornmarket began its dive. Good weather in Julyimproved production prospects, adding to thedownward trend. By late July, the corn markethad dropped $2 from the peak.

Corn-friendly temperatures and adequatemoisture were needed in July for pollination,which occurred nearly two weeks later thanusual and into August for replanted acres,according to Iowa State University Extensioncorn specialist Roger Elmore. Once the cornfinished pollinating, he said yields will beclosely tied to fall temperatures. Corn growthmodels run by Elmore show a year reminis-cent of 1999 with a warm fall and a late frostthat could produce yields near 96 percent ofnormal. However, drastic temperature swingsor an early frost could cut yields to as low as45 percent of normal.

The combination of crop developmentand actual final acres harvested will determine

the size of the crop. “People are still wonder-ing [about] the NASS update,” said DarrelGood, extension economist for the Universityof Illinois. “They think farmers reported whatthey expected to get replanted, and the ques-tion is whether that got done. My guess is themarket has built in a slightly smaller harvestedacres number than what the USDA reportedin June.”

Overall, Iowa’s ethanol industry waslightly affected by the flooding. ArcherDaniels Midland Co.’s plant in Cedar Rapids,Iowa, suspended production for a few daysdue to interrupted water supplies from thecity. Penford Products Co. had just completedwork on a new 45 MMgy ethanol wet millprior to the flood, according the IowaRenewable Fuels Association, and anticipatedit would be the end of August before it wouldbegin manufacturing significant volumes. Athird unnamed plant in Cedar Rapids experi-enced rail disruptions from a washed outUnion Pacific rail line.

Several main and branch rail lines, espe-cially east-west routes, were closed or curtaileddue to washouts of tracks and bridges underwater. Some railroads had trains strandedbetween washouts. Monte Shaw, executivedirector of the IRFA, said the situation wasespecially challenging in mid-June. There weredelays, he said, and producers ended up pay-ing more to ship their product to market usingalternative rail routes through Canada ortrucks instead of railcars. “I take my hat off tothe marketers and logistics folks in the indus-try,” Shaw said. “We took a 500-year flood andfrom the customer’s standpoint didn't miss abeat, but that doesn't mean we didn't workreally hard to make that happen. I don’t wantto minimize a flood, but after taking a stepback, the decimal point [for production] does-n’t change. The amount of production thatwas offline for a few weeks is almost back upto full capacity.”

—Susanne Retka Schill and Ryan C. Christiansen

Corn market settles after Midwest weather woes

�continued from page 30



Louisiana to pursue hydrousethanol, blender pumpsThe Louisiana Department of Agricultureand Forestry’s Division of Weights andMeasures will monitor the performance ofblender pumps and hydrous ethanol blendsin separate four-year pilot programs estab-lished in the state’s new advanced biofuelsinitiative. The initiative calls for a decentral-ized network of small advanced biofuelplants and offers income tax credits on thefirst 10 MMgy through 2012. The legisla-tion targets state-grown crops other thancorn that require less water and nitrogenthan corn while being tolerant to extremesin moisture, high temperatures and margin-al soils.

GIS tool indicates potential Illinois plant sitesFunded with a grant from the IllinoisDepartment of Commerce and EconomicOpportunity, the Illinois Value-AddedSustainable Development Center hasdeveloped an interactive geographic infor-mation system mapping tool designed toaid in selecting feasible locations for newethanol or biodiesel plants in Illinois. The

INDUSTRYNEWS

Advanced Biofuels Workshop to feature author Zubrin

Leading-edge speakers and topics will be thefocus of BBI International Inc.'s AdvancedBiofuels Workshop & Trade Show to be heldSept. 28-30 at the Minneapolis ConventionCenter. Because the federal renewable fuels stan-dard requires that 21 billion gallons of advancedbiofuels be consumed by 2022, the event willaddress where and how these biofuels will be pro-duced and marketed.

Robert Zubrin, author of Energy Victory:Winning the War on Terror by Breaking Free of Oil,will be the keynote speaker at the workshop. In hisbook, Zubrin shows how the United States couldbe using money spent on fuel to help domesticand international farmers instead of sending it tocountries with ties to terrorism. He will offer anew vision of how switching to alcohol-basedfuels could help safeguard homeland security, andprovide solutions for global warming and third-world development.

Leading companies in the biochemical andthermochemical conversion of biomass into fuelare invited to present how they have brought theirtechnologies to the edge of commercial viability.Breakout sessions will also address managingfeedstock logistics, future feedstock options, mar-kets for advanced biofuels and biofuels technolo-gies of the future. The workshop is aimed at giv-

ing investors, project developers, engineeringcompanies, technology providers, feedstock sup-pliers and policymakers an opportunity to exam-ine leading-edge biofuel technologies.

Advanced registration is available until Sept.15. Interested parties can register, view the agendaand find more information at www.advancedbiofuelsworkshop.com. Booth sales andsponsorship opportunities are also available. Formore information about sponsoring the event, e-mail [email protected]. Formore information about booth sales, [email protected].

—Jerry W. Kram

Robert Zubrin, author of Energy Victory: Winningthe War on Terror by Breaking Free of Oil, will be

the keynote speaker at the Advanced Biofuels

Workshop to be held in Minneapolis on Sept. 28-30.

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INDUSTRYNEWS

Canadian RFS opens doors for new marketsOn June 26, the Canadian

Senate passed Bill C-33, whichrequires Canada to include 5 per-cent renewable content in gaso-line by 2010 and 2 percent renew-able content in diesel fuel by2012.

In the wake of the landmarkbiofuels bill, Canada’s ethanolindustry is actively embarking on a new erato produce sufficient volumes of ethanol—both corn-based and cellulosic—in order tofulfill the new mandate. According toCanadian Renewable Fuels AssociationPresident Gordon Quaiattini, the newrenewable fuels standard is expected toprovide a solid foundation on which pro-ducers in the country can expand the exist-ing ethanol market. “We’re quite excitedabout the fact that we now have a nationalstandard that will be brought into effect,”he said. “Pursuing larger targets in thefuture becomes that much easier now thatwe have a legislative mandate and a frame-work in place in order to be able to dothat.”

Currently, Canada produces approxi-mately 246 MMgy of corn-based ethanol,

and an additional 124 MMgy isunder construction, according todata compiled by BBIInternational Inc. The federalmandate requires 528 MMgy (2billion liters per year) of ethanolproduction using domesticsources and 84 MMgy (320 millionliters per year) of biodiesel pro-

duction. As a result, the CRFA expects thecreation of 20 new biofuels facilities tomeet this requirement.

Quaiattini added that provincial biofu-el mandates should create an even widermarket for more energy-efficient ethanolplants that are looking to comply with strin-gent carbon-reduction standards put inplace by provinces such as Ontario, whichis moving toward a 10 percent carbonreduction target by 2020.

Only two Canadian provinces haveethanol mandates currently in effect:Ontario and Saskatchewan. Ontario enact-ed an E5 mandate in January 2007, whileSaskatchewan enacted in October 2006 arequirement that at least 7.5 percent ofgasoline must contain ethanol.

Meanwhile, Canada’s largest ethanol

producer GreenField Ethanol Inc. has part-nered with Enerkem, a Quebec-basedleader in the gasification and synthesis ofbiofuels from municipal solid waste andforest residues, to build a production plantin Edmonton, Alberta. The first stage ofthe project calls for construction of a 10MMgy facility that will utilize Enerkem’sgasification, sequential gas conditioningand catalysis technology.

Calgary, Alberta-based CR Fuels Inc.has obtained all of its key permits for thedevelopment of an integrated biofuelscomplex in Strathmore, Alberta, where itplans to build a 25 MMgy ethanol plant and30 MMgy biodiesel plant on the same site.Construction is scheduled to begin inMarch 2009, according to CR FuelsPresident and Chief Executive OfficerGordon Hart. “Even if there wasn’t a man-date, there should be a desire for this prod-uct because of our limited carbon dioxidefootprint and the way we’ve put this pack-age together, although the national man-date definitely helps,” he said.

—Bryan Sims

Quaiattini

On June 26, Iowa’s Renewable FuelInfrastructure Board approved 21 new awardstotaling $777,600 for E85 and biodiesel retail andterminal infrastructure. The grants were awardedto 17 companies, three of which will installethanol blender pumps. These three companiesare Popkes Car Care Center Inc. in Rock Rapids,Iowa; Oak Street Station LLC in Inwood, Iowa;and Galva Holstein Ag LLC in Galva andHolstein, Iowa.

According to Galva Holstein Ag GeneralManager Delayne Johnson, his company wouldn’thave installed the blender pumps at this time ifgrant money wasn’t available to help cover thecost. At press time, he expected the pump at thecompany’s station in Galva to be ready for use bylate August. The pump at the station in Holsteinwas slated to be operational in September. “Wefeel the pumps will give more diverse options toconsumers,” Johnson said. “We also think it willallow people to use more ethanol.” He explainedthat although many of his customers aren’t cur-rently aware of ethanol blender pumps, manyhave inquired about the availability of E85. “Welive in rural northeastern Iowa, an area where peo-ple understand ethanol and the importance ofusing products made in the Midwest versus theMiddle East,” he said. “I believe that once theconsumer understands [the pumps] exist, they willsupport and utilize them in a tremendous way.”

Over the next three years, $13 million will beallocated by the Renewable Fuel Infrastructure

Program to improve consumer access to renew-able fuels in Iowa. In May, legislation signed byIowa Gov. Chet Culver expanded the original2006 program. The new legislation allows fundingfor ethanol blender pumps, and also allows retail-ers to receive funding for both E85 and biodieselinfrastructure. In addition, it calls for the IowaOffice of Energy Independence to create astatewide renewable fuels marketing plan aimed atflexible-fuel vehicle owners.

—Erin Voegele




program provides a detailed view of morethan 182 resource “layers” such as rivers,roads, population and existing plants. Thefree tool is available online at www.illinois-siteselectiontool.org/SiteTool.

Utica settles lawsuit with Wisconsin regulatorsThe Wisconsin Department of NaturalResources has settled a lawsuit filed againstethanol producer Utica Energy LLC inOshkosh, Wis., for violating the state’s airand water pollution control laws. Under theterms of the settlement, Utica Energy willpay a total of $75,000 in penalties, fees andother costs. A complaint claimed UticaEnergy violated numerous requirements ofits air pollution control permit and waste-water discharge permits, including dis-charges into an unnamed tributary ofSawyer Creek.

Hunter-Reay wins IndyCar race at Watkins GlenRyan Hunter-Reay, driver of the No. 17Ethanol Dallara/Honda/Firestone car,won the IndyCar Series Camping World

INDUSTRYNEWS

Iowa funds blender pumps

IsoStabTM is composed of acidsthat appear naturally in hop plantsBenefits: � Controls lactic and acetic acid formation

� Optimizes plant efficiency� Active at a wide pH range, thermally stable

IsoStab™… a naturally derived acid to combat resistantbacteria during fermentation.

5185 MacArthur Blvd. NW, Ste. 300Washington, DC 20016-33441 • 202.777.4800 • Fax 202-777-4895 www.bthp.info

Ethanol blender pumps, which dispense mid-level ethanol

blends, are now eligible for funding under Iowa’s

Renewable Fuels Infrastructure Program.

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INDUSTRYNEWS

Genencor, Novozmyes beef up services in MidwestTwo world leaders in enzyme

production—Genencor, A DaniscoDivision and Novozymes Inc.—arebuilding new facilities in theMidwest. Novozymes is focusing onthe corn-based and cellulosic ethanolmarkets, while Genencor is develop-ing an education center to addressquestions on fuel-grade ethanol andcarbohydrate processing. Althougheach company has a different focus,both said they are committed to pro-ducing enzymes for the UnitedStates and are dedicated to renewableenergy.

Access to customers and environmentalconsiderations played a role in Novozymes’plans to build an enzyme production facility inBlair, Neb. “We started looking at the entireglobe, and considered Latin America andChina,” said Peder Holk Nielson, executivevice president of Novozymes’ enzyme busi-ness. The search for a site ended in the UnitedStates. “We found that Nebraska had greatconditions for both the raw materials for fer-mentation, starch and soybean meal, and ener-gy at the right price,” Nielson said.

The new facility will produce enzymesfor corn-based ethanol. Later, Novozymesplans to focus on cellulosic ethanol but is

“open to new technologies as we get into themanufacturing of those enzymes,” Nielsonsaid. The plant is scheduled to begin operationin 2010 and will produce enough enzymes tosupply demonstration-scale cellulosic ethanolplants. “Now it is a question of whether thedemonstration plants will be ready for thoseenzymes in 2010,” Nielson said. “It may bemore like 2011.”

Other ideal logistics in Blair included rail-road and river access, and adequate water sup-ply. The plans to build the plant also signify asense of permanence in the production ofenzymes and the ethanol industry. “We aredoing this as a long-term investment,” Nielson

said. “This plant will sit there for thenext 50 years, so take this as a com-mitment to a long-term develop-ment to bioenergy and biofuels inthe Midwest.”

Genencor is planning its Centerof Excellence in Cedar Rapids,Iowa. “The Center of Excellencewill be an application and trainingcenter, and it will be a place wherecustomers can come in and work ontheir real-world problems,” saidGenencor USA media contactJennifer Hutchins. “It provides themhands-on access to our technology

and experts.” The building won’t address sec-ond-generation ethanol.

Genencor’s facilities are strategicallylocated within the Corn Belt to be in closeproximity to the company’s main customers.“This is another step in serving our grain- andcarbohydrate-processing customers, andshows dedication to the region and our cus-tomers,” Hutchins said. The 20,000-square-foot facility will be operational in the spring of2009.

—Suzanne H. Schmidt

Novozymes’ new facility will be located in Blair, Neb. Plans are to break ground

in 2008 and begin enzyme production in 2010.

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Grand Prix at Watkins Glen Internationalin Watkins Glen, N.Y., on July 7, breakinga four-year victory drought for RahalLetterman Racing Team Ethanol. It’s thethird season that ethanol has sponsored aRahal Letterman Racing team and the sec-ond season that the IndyCar Series hasraced with E100 in the race cars’ tanks.The win boosted Hunter-Reay into ninthin the IndyCar Series point standings.

Gallagher Review calls for biofuels use to decreaseIn July, the U.K. Renewable Fuels Agencyreleased a report, titled “The GallagherReview of the Indirect Effects of BiofuelsProduction,” which examined the indirecteffects of biofuels on greenhouse gasemissions, land-use change and foodprices. Among other points, it concludedthat the introduction of biofuels shouldbe slowed until effective controls are inplace to prevent land-use change and high-er food prices. It acknowledged that there is afuture for a sustainable biofuels industry, butcreating the right policy framework is chal-lenging and will take time. The report can beviewed at www.renewablefuelsagency.org/reportsandpublications/reviewoftheindirect-effectsofbiofuels.cfm. EP

INDUSTRYNEWS

Plymouth Oil to extract corn oilWith its 55 MMgy ethanol

plant near completion in Merrill,Iowa, Plymouth Energy LLC isalready looking ahead at expandingits product offering. A sister compa-ny named Plymouth Oil LLC hasbeen formed to produce food-gradecorn oil from fractionated corngerm and will send the starch fromthe corn to the ethanol plant for fer-mentation, according to DaveHoffman, a board member of bothcompanies and founder ofPlymouth Oil.

Hoffman said the new frac-tionation and extraction unit willhelp to address the food-versus-fueldebate by producing both. “Theonly thing removed in the ethanol process is thecarbohydrates to make ethanol, and so all of theother nutrition is there,” he said. “Part of thatnutrition is going for food.”

Plymouth Oil will use solvent extraction toproduce the corn oil and defatted germ, Hoffmansaid. Plymouth Energy will supply approximatelyhalf of Plymouth Oil’s capacity of 400 tons ofcorn per day. Plymouth Oil will produce approxi-mately 80 tons of corn oil per day.

Removing the germ and oil increases theprotein content of the distillers grains to 45 per-

cent to 47 percent, Hoffman said, making themmore usable in the poultry and swine markets.“The balance of our dry product from this extrac-tion will be a dry product that we can feed to hogsand other livestock species, and so we think wewill have some value here,” he said.

Hoffman said the companies are exploringthe potential for removing the oil that remains inthe distillers grains for sale to biodiesel plants, aswell.

—Ryan C. Christiansen

Plymouth Energy LLC is under construction in Merrill, Iowa.

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INDUSTRYNEWS

Brazil launches campaign to remove ethanol tariffThe Brazilian Sugarcane Industry

Association, known as UNICA, launched acampaign July 4, targeting U.S.Independence Day travelers to encourageCongress to revisit the 54-cent-per-gallonethanol import tariff.

The “Are We There Yet?” movementsuggested that the American public shouldconvince the U.S. Congress to eliminate orlower the tariff in order to reduce the costof gasoline. “Americans are being deniedan opportunity to save money at thepump,” said Joel Velasco, chief representa-tive for UNICA. “Eliminating or evenreducing the tariff on cane ethanol couldprovide immediate relief, particularly instates like California and Florida, where thisform of fuel is already in use.”

UNICA said that although the UnitedStates imported 189 million gallons ofBrazilian sugarcane-based ethanol in 2007,consumers aren’t seeing the benefits theyshould, as sugarcane-based ethanol ischeaper to produce than corn-basedethanol in the United States. The tariff wasfirst imposed in 1980, and while subsidiesto the U.S. ethanol industry were reducedfrom 51 cents per gallon to 45 cents pergallon in the 2008 U.S. farm bill, the ethanolimport tariff remains at 54 cents.

U.S. Sens. Dianne Feinstein, D-Calif.,and Judd Gregg, R-N.H., introduced a tar-iff reduction measure to legislation onemonth before UNICA’s campaign launch.“This bill would essentially level the playingfield and ensure that U.S. refiners are ableto purchase cheaper and climate-friendlyethanol, no matter where it comes from,”Feinstein said. Gregg made similar sugges-tions. “This legislation introduced today ona bipartisan basis offers a reasonable solu-tion that lowers the tariff on ethanol, keep-ing prices more competitive for Americanconsumers and steering us in the directionof more affordable energy alternatives,” hesaid.

Coalitions of meat industry groups,and food and beverage manufacturers, havealso sent letters to the Bush administrationin support of suspending the tariff, withhopes of corn price reductions.

In opposing the campaign, a largenumber of commodity and ethanol leaderssent a letter to President George W. Bush,expressing disapproval of a removal orreduction of the tariff. “The 54-cent-per-gallon secondary tariff was enacted to off-set any incentive for imported ethanol tobenefit from the 54-cent-per-gallon taxcredit for ethanol blended into motor fuel,”

the letter said. “This tax credit is taken byrefiners who blend ethanol into motor fuel,not ethanol producers.” The letter, whichwas signed by the American Coalition forEthanol, Ethanol Producers andConsumers, the National Association ofWheat Growers, the National CornGrowers Association, the National FarmersUnion, the National Sorghum Producersand the Renewable Fuels Association, stat-ed that the purpose of the tariff is to pro-tect American taxpayers from subsidizingforeign-produced ethanol and not to pro-tect domestic ethanol.

RFA President Bob Dinneen addedthat removing the tariff wouldn’t lowerfood prices. Instead, such an action wouldhalt development of new ethanol technolo-gies, and take the jobs and economicopportunity being generated by the domes-tic ethanol industry to foreign countries. “Istrongly encourage President Bush to rec-ognize that skyrocketing oil prices play a fargreater role in the complex issue of foodprices than ethanol and to reject the effortsto remove the secondary tariff.”

—Anna Austin

INDUSTRYEXPANSION COMPLETEPLANT EXPANSIONPROJECT COMPLETENEW PROJECT

Ethanol Plant Construction

hanks to a stint of dry weather in July, especially compared

with June, many project developers were able to make more

progress than they had initially anticipated. Several projects

on this list reported that construction was nearly complete

and could be finished within a month’s time.

Several plant and project managers have voiced concern

over corn prices. Few, if any, expect significant adjustments in the next

12 months. One project manager admitted that construction of his plant

was nearly complete, but it may not start production right away. “We’re

hoping the price of corn goes down or the price of ethanol goes up,” he

said. “It’s going to take some time before we see any change.”

Many plants are starting to assemble staffs, and three facilities on

this list were in the midst of employee training. In particular, Edgar

Seward and his team at Indiana Bio-Energy LLC traveled to the com-

pany’s sister facility Green Plains Renewable Energy Inc. in

Shenandoah, Iowa, for training. GPRE’s similar design gave the new

staff a firsthand look at how the plant in Bluffton will operate.

At press time, the ethanol industry was approaching a 10 billion-

gallon capacity. Ninety-two percent of that capacity is corn-based,

while milo or a combination of corn and milo make up approximately

7.5 percent. On the plant construction list, there are another two proj-

ects that intend to use a combination of corn and milo as their primary

feedstocks. However, Louisiana Green Fuels LLC intends to use sug-

arcane bagasse and sweet sorghum. Although interest in other unique

feedstocks is growing, only this plant is currently planning to do so.

On a historical basis, it's evident that plant construction has

slowed. So far this year, nine companies have started construction or

announced groundbreaking. During this same time in 2007, 40 plants

broke ground. Two facilities completed construction in the past month.

Terra Grain Fuels Inc., a 150 MMly (40 MMgy) plant in Belle Plaine,

Saskatchewan, is using wheat as a feedstock. VeraSun Hankinson

also started production after halting start-up due to unfavorable market

conditions. VeraSun continues to delay start-up at its facilities in

Harley, Iowa, and Welcome, Minn. Including these two plants, 37 facil-

ities have completed construction or announced start-up since

January. Altogether, these 37 plants account for 2.63 billion gallons of

additional production capacity per year. Compared with the same peri-

od in 2007, only 27 plants have come on line, increasing to 38 by the

end of 2007.

—Craig A. Johnson

Construction Continues at a Steady Pace

T


To provide updates to this list, contact Craig A. Johnson at (701) 738-4946 or

[email protected].

EPM will remove seemingly inactive projects from this list if:

1. Our good faith attempts to contact project representatives go

unanswered for three straight months.

2. Through exhaustive means, we are unable to verify the continued

advancement of a project.

3. The Renewable Fuels Association, as well as project

representatives, are notified and given a reasonable amount of time

to verify the project’s current status.

Construction Represents 3.42 Billion Gallons Annually


Bridgeport Ethanol LLC

Location Bridgeport, Nebraska Ethanol marketer Poet Ethanol Products

Design/builder ICM Inc. Distillers grains marketer Colorado Agri Products

Process technology ICM Inc. Carbon dioxide marketer undeclared

Capacity 50 MMgy Broke ground September 2007

Feedstock corn Target start-up date September 2008

Synopsis of progress

All buildings are erected, and nearly all piping work is complete. Most of the work that remains is wiring.

Archer Daniels Midland Co.

Location Cedar Rapids, Iowa Ethanol marketer Archer Daniels Midland

General contractor undeclared Distillers grains marketer undeclared

Process technology undeclared Carbon dioxide marketer undeclared

Capacity 275 MMgy Broke ground June 2007

Feedstock corn Target start-up date first quarter 2010


No further information was available at press time.

Archer Daniels Midland Co.

Location Columbus, Nebraska Ethanol marketer Archer Daniels Midland

General contractor undeclared Distillers grains marketer undeclared

Process technology undeclared Carbon dioxide marketer undeclared

Capacity 275 MMgy Broke ground July 2007

Feedstock corn Target start-up date third quarter 2009


No further information was available at press time.

Cardinal Ethanol LLC

Location Union City, Indiana Ethanol marketer Murex

Design/builder Fagen Inc. Distillers grains marketer CHS Inc.

Process technology ICM Inc. Carbon dioxide marketer N/A

Capacity 100 MMgy Broke ground February 2007

Feedstock corn Target start-up date fall 2008


Rail work is nearly complete. Switch work that will tie in the main line was set to begin Aug. 1. The pipe rack

is complete, and additional piping, pumps and motor work is underway in the tank farm. Load-out swing arms

and conveyors are being installed in the grain-receiving area.

Aventine Renewable Energy-Mt. Vernon LLC

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Aventine Renewable Energy-Aurora West LLC

Location Aurora, Nebraska Ethanol marketer Aventine Renewable Energy

General contractor Kiewit Energy Co. Distillers grains marketer Aventine Renewable Energy

Process technology Delta-T Corp. Carbon dioxide marketer N/A




Work on the tank farm continues. Foundation work for the process building and energy center is underway.

Aventine Renewable Energy-Mt. Vernon LLC

Location Mt. Vernon, Indiana Ethanol marketer Aventine Renewable Energy

General contractor Kiewit Energy Co. Distillers grains marketer Aventine/Consolidated Grain and Barge





Foundation work for the process building and energy center continues. Construction of the tanks and piping is

ongoing.

Aventine Renewable Energy-Aurora West LLC

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First United Ethanol LLC

Location Camilla, Georgia Ethanol marketer Eco-Energy

Design/builder Fagen Inc. Distillers grains marketer First United Ethanol


Capacity 100 MMgy Broke ground January 2007

Feedstock corn Target start-up date summer 2008


N/A

GreenField Ethanol

Location Johnstown, Ontario Ethanol marketer Commercial Alcohols

General contractor SNC-Lavalin Group Distillers grains marketer Commercial Alcohols


Capacity 200 MMly (53 MMgy) Broke ground October 2006

Feedstock corn Target start-up date December 2008


With more than 270 workers on-site, construction continues in the grain handling and receiving areas, ener-

gy center, process building and tank farm.

Hawkeye Renewables

Location Menlo, Iowa Ethanol marketer Eco-Energy

Designer/builder Fagen Inc. Distillers grains marketer undeclared



Feedstock corn Target start-up date fourth quarter 2008


Progress is being made, but no further details were available at press time.

Clean Burn Fuels LLC

Location Raeford, North Carolina Ethanol marketer undeclared

General contractor Biofuels Design/Clean Burn Fuels Distillers grains marketer undeclared

Process technology Katzen International Carbon dioxide marketer N/A


Feedstock corn Target start-up date June 2009


Foundation work continues.

Ethanol Grain Processors LLC

Location Obion, Tennessee Ethanol marketer Aventine Renewable Energy



Capacity 100 MMgy Broke ground December 2006

Feedstock corn Target start-up date October 2008


N/A

Cilion Ethanol LLC

Location Keyes, California Ethanol marketer undeclared

General contractor Harris Construction Distillers grains marketer undeclared

Process technology Praj Industries Ltd. Carbon dioxide marketer N/A




Piping and electrical work continues at the site.

GreenField Ethanol

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“In my eyes, maintenance is equal to maximizing production.”

-Dwayne Braun(General Manager-US Bio Platte Valley)

Mature Maintenance Management Software for the Growing Ethanol Industry

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LDAR Inspections

Preventative Maintenance

Asset Management

Inventory Management

Work Order Management

Project Management

For over 25 years, MAPCON has been

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(left) as well as many other ethanol plants.

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the business end can be just as confusing. At Kennedy and

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can help you make the most of your operation’s potential.

Our professionals can help you make sense of the confusing

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KAC.10442_EPM_Cir_7.5x3.375_4C 1 7/24/08 11:05:51 AM

Holt County Ethanol LLC

Location O'Neill, Nebraska Ethanol marketer undeclared

General contractor Adams Construction Distillers grains marketer undeclared

Process technology Vogelbusch Carbon dioxide marketer N/A


Feedstock corn Target completion date late 2008


N/A

Hawkeye Renewables

Location Shell Rock, Iowa Ethanol marketer Eco-Energy

Designer/builder Fagen Inc. Distillers grains marketer undeclared





Progress is being made, but no further details were available at press time.

Highwater Ethanol LLC

Location Lamberton, Minnesota Ethanol marketer undeclared

Design/builder Fagen Inc. Distillers grains marketer undeclared


Capacity 50 MMgy Broke ground November 2007

Feedstock corn Target start-up date spring 2009


N/A

Indiana Bio-Energy LLC

Location Bluffton, Indiana Ethanol marketer Aventine Renewable Energy




Feedstock corn Target start-up date August 2008


Electrical and piping work continues. Rail loop is nearly complete. Staff training is underway at the company’s

sister facility Green Plains Renewable Energy Inc. in Shenandoah, Iowa.

Homeland Energy Solutions

Location Lawler, Iowa Ethanol marketer undeclared

Design/builder ICM Inc. Distillers grains marketer undeclared


Capacity 100 MMgy Broke ground May 2007

Feedstock corn Target start-up date January 2009


N/A

Kawartha Ethanol Inc.

Location Havelock, Ontario Ethanol marketer undeclared

General contractor Profab International Distillers grains marketer Thompson's Ltd

Process technology Delta-T Corp. Carbon dioxide marketer undeclared

Capacity 80 MMly (21 MMgy) Broke ground October 2007



N/A

Louisiana Green Fuels LLC

Location Lacassine, Louisiana Ethanol marketer undeclared

General contractor Praj Industries Ltd. Distillers grains marketer undeclared

Process technology Louisiana Green Fuels Carbon dioxide marketer undeclared

Capacity 100 MMgy Broke ground April 2008

Feedstock sugarcane bagasse/sweet sorghum Target start-up date June 2009


The company received a shipment of processing equipment from Praj Industries in June. Foundation work

continues.

Integrated Grain Processors Cooperative Inc.

Location Aylmer, Ontario Ethanol marketer undeclared

General contractor North America Construction Ltd. Distillers grains marketer undeclared


Capacity 150 MMly (40 MMgy) Broke ground August 2007

Feedstock corn Target start-up date late 2008


Construction is moving into the final stages while piping and wiring continue. Staff members were being

trained in last July. The plant expected to begin receiving corn in mid-August.


Pacific Ethanol Stockton LLC

Location Stockton, California Ethanol marketer Kinergy Marketing

General contractor W.M. Lyles Co. Distillers grains marketer Pacific Ag Products LLC


Capacity 50 MMgy Broke ground April 2007



Construction continues. No further information was available at press time.

Platinum Ethanol LLC

Location Arthur, Iowa Ethanol marketer Provista

Design/builder Fagen Inc. Distillers grains marketer UBE Ingredients



Feedstock corn Target start-up date September 2008


Roads are being paved, and buildings are being insulated. A corn grinding date is scheduled for Sept. 18.

Patriot Renewable Fuels LLC

Location Annawan, Illinois Ethanol marketer Murex

Design/builder Fagen Inc. Distillers grains marketer undeclared


Capacity 100 MMgy Broke ground February 2007

Feedstock corn Target start-up date 2008


N/A

One Earth Energy LLC

Location Gibson City, Illinois Ethanol marketer Eco-Energy

Design/builder Fagen Inc. Distillers grains marketer Ag Motion Inc.


Capacity 100 MMgy Broke ground October 2007

Feedstock corn Target start-up date second quarter 2009


Construction of the distillers grains building is complete. All tanks have been erected. Water piping was

underway at the end of July.

Northeast Biofuels LLC

Location Volney, New York Ethanol marketer Noble Americas Corp.

General contractor Lurgi Inc. Distillers grains marketer Perdue Farms

Process technology Lurgi Inc. Carbon dioxide marketer BOC Gases




N/A

Northwest Renewable LLC

Location Longview, Washington Ethanol marketer U.S. Ethanol LLC

General contractor Makad Construction Corp. Distillers grains marketer Lansing Trade Group

Process technology Lurgi Inc. Carbon dioxide marketer undeclared




N/A

Nexsun Ethanol LLC

Location Ulysses, Kansas Ethanol marketer undeclared

Design/builder ICM Inc. Distillers grains marketer undeclared


Capacity 40 MMgy Broke ground August 2007

Feedstock corn/milo Target start-up date late 2008


N/A

NEDAK Ethanol LLC

Location Atkinson, Nebraska Ethanol marketer Eco-Energy

General contractor Delta-T Corp. Distillers grains marketer Frahm and Deitloff





Construction is nearly complete with final electrical and piping work underway. Hydro-testing has begun. Staff

members were being trained at the end of July.


1-800-827-1662 • www.interstates.com

ELECTRICAL CONSTRUCTION • ELECTRICAL ENGINEERING • AUTOMATION • INSTRUMENTATION

Poet Biorefining-Fostoria

Location Fostoria, Ohio Ethanol marketer Poet Ethanol Products

Design/builder Poet Design & Construction Distillers grains marketer Poet Nutrition

Process technology Poet Design & Construction Carbon dioxide marketer N/A




Construction continues. Hiring is underway, but no further information was available at press time.

Poet Biorefining-Marion

Location Marion, Ohio Ethanol marketer Poet Ethanol Products



Capacity 68 MMgy Broke ground May 2007




Route 66 Ethanol LLC

Location Tucumcari, New Mexico Ethanol marketer undeclared

General contractor APS/United Stainless Process Technology Distillers grains marketer undeclared

Process technology United Stainless Process Technology Carbon dioxide marketer N/A


Feedstock corn/milo Target start-up date 2008


N/A

Poet Biorefining-North Manchester

Location North Manchester, Indiana Ethanol marketer Poet Ethanol Products



Capacity 68 MMgy Broke ground third quarter 2007




Southwest Iowa Renewable Energy LLC

Location Council Bluffs, Iowa Ethanol marketer Lansing Ethanol Group

Design/builder ICM Inc. Distillers grains marketer Bunge



Feedstock corn Target start-up date August 2008


N/A

Southwest Iowa Renewable Energy LLC

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Terra Grain Fuels Inc.

Location Belle Plaine, Saskatchewan Ethanol marketer undeclared

General contractor EllisDon/VCM Contractors & Engineers Distillers grains marketer undeclared


Capacity 150 MMly (40 MMgy) Broke ground September 2006

Feedstock wheat Target start-up date July 2008


This plant has completed construction. Congratulations Terra Grain Fuels Inc.!

Project Complete


VeraSun Hankinson

Location Hankinson, North Dakota Ethanol marketer Provista




Feedstock corn Target start-up date July 2008


This facility started production once local market conditions improved. Congratulations VeraSun Hankinson!

Project Complete

VeraSun Dyersville

Location Dyersville, Iowa Ethanol marketer Provista






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

VeraSun Janesville

Location Janesville, Minnesota Ethanol marketer Provista






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

White Energy Plainview LLC

Location Plainview, Texas Ethanol marketer Murex

Design/builder Fagen Inc. Distillers grains marketer The Scoular Co.



Feedstock corn/milo Target start-up date 2008


N/A

Tharaldson Ethanol LLC

Location Casselton, North Dakota Ethanol marketer undeclared

General contractor Wanzek/Valley Engineering Distillers grains marketer undeclared

Process technology Vogelbusch Carbon dioxide marketer N/A




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

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PHOTO: ROBERT SHIPP, SHOW ME ETHANOL LLC

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Not many people knew

about the small town of Carrollton, Mo.,

with a population just over 4,000 on the

banks of the Crooked River. In the past

few years, however, that’s begun to

change. In 2005, Carrollton was named

an All-America City—one of 10 across

the country—and in that same year,

investors began to imagine what the lit-

tle town might look like with an ethanol

plant.

Show Me Ethanol LLC is owned

by a group of 550 agricultural investors.

Ten percent is owned by Central

Missouri Energy LLC, a proposed

biodiesel plant in Fulton, Mo., while

Ray-Carroll County Grain Growers Inc.

controls another 20 percent. Since rais-

ing equity is no longer as easy at it once

was for some projects, Show Me

Ethanol’s equity drive was especially

impressive. The initial offer began in

mid-2006, and the company was able

to secure financing by the end of that

year. The plant broke ground March 26,

2007. ICM Inc. was on-site by mid-April,

and construction was fully underway by

mid-June.

Once construction began, work

moved rapidly by industry standards.

“That’s the work of Ted Nuncio, our site

superintendant,” says General Man-

ager Greg Thomas. “He did an out-

standing job coordinating the [subcon-

tractors]. The plan wasn’t to start oper-

ations until July 2008, but we were able

to complete construction and start pro-

ducing May 23—two months ahead of

schedule.” Even with a harsh winter,

wet spring and a rash of electrical

storms that threatened the construction

site, crews stayed active. Show Me

Ethanol had an average of 250 workers

on the site and experienced no signifi-

cant delays. “The spirit of cooperation

was unlike anything I’d ever seen,” says

Thomas of the subcontractors. “They

coordinated their activities so that the

scope of work was maximized. It was

so well-run.”

In addition to the success the

company realized in exceeding its con-

struction timeline, Thomas also consid-

ers the hiring process a major triumph.

“One of my concerns was what kind of

people would be available to run the

place,” he says. “Over the course of my

first few months, I probably talked to 40

or 50 people who were interested in

working at the plant. When the plant

manager came on board, he started

advertising for employees, and of those

50 people, only two didn’t make the first

cut, which says a lot about the quality of

the workforce here.” Once the manage-

ment team felt it had a superior pool of

candidates, it started the hiring process,

bringing new employees in at the end of

March 2008. The staff now includes 36

above-average salaried workers. “It

was a very pleasant surprise for me,”

Thomas says.

ICM recommends that new plant

employees complete an eight-week

training course before a facility goes

into full operation. Show Me Ethanol’s

management team took advantage of

the training in the spirit of giving the

venture “every possible chance to suc-

ceed,” Thomas says. After the new

hires were trained, ICM reported that

Show Me Ethanol’s team was one of

the best they’d trained.

According to Thomas, the plant

averaged 81 percent of it total 55 MMgy

capacity during its first 30 days. “We

reached 105 percent of nameplate

capacity in about 12 to 14 days of start-

up,” he says.

Overall, the current economics of

ethanol production are troubling for

plants coming on line in 2008, and

Thomas takes a pragmatic view of

these concerns. “We have bought corn

and sold ethanol at a positive margin for

a period of time,” he says. “The eco-

nomics of ethanol continue to be mixed,

and no one has a crystal ball that tells

them what oil prices and corn prices are

going to do. If everything moves in tan-

dem, we can continue to move forward.

If something unforeseen was to cause

an astronomical rise in the price of corn

or a precipitous drop in ethanol’s price,

it would certainly have an adverse

effect on the company. However, it’s

going to have an adverse affect on

every ethanol company. It’ll be all of us

in that boat.” On the positive side, Show

Me Ethanol brings a combined eco-

nomic impact of $1.5 million to $2 mil-

lion to the local economy.

Thomas and his team foresee

many more successes down the road.

Time will tell if the group’s hard work will

pay off, but Show Me Ethanol is off to a

solid start.

—Craig A. Johnson

Demonstrating Speed, Accuracy

SHOW ME ETHANOL LLC

LOCATION Carrollton, Missouri

DESIGN/BUILDER ICM Inc.

PROCESS TECHNOLOGY ICM Inc.

CAPACITY 55 MMgy

FEEDSTOCK corn

ETHANOL MARKETER Eco-Energy Inc.

DISTILLERS GRAINS MARKETER Ray-Carroll County Grain Growers

CARBON DIOXIDE MARKETER N/A

BROKE GROUND March 2007

START-UP DATE May 2008


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After a six-month trial with

approximately 300 farmers and 13 grain

buyers in south-central Nebraska, a new

online corn marketing system will be made

available throughout Nebraska and Iowa

this fall. Pioneer Hi-Bred International Inc.

developed the corn marketing tool, called

MarketPoint, which can be found on the

Pioneer GrowingPoint Web site.

“We wanted to prove the concept,”

says Joe Foresman, Pioneer’s senior mar-

keting manager of biofuels. “Would farm-

ers come to the site to offer corn to multiple

partners? Would buyers come to the site to

originate corn?” The buyers included a mix

of ethanol plants, livestock producers and

elevators.

Pioneer partnered with Farms

Technology LLC in Overland Park, Kan., to

deliver the user-friendly electronic platform

for executing transactions. For the farmer,

Foresman says it allows offers to multiple

buyers, specifying the quantity, quality and

a target price on the farm. The farmer can

also establish a freight matrix adjusting

delivery costs according to the current

price of fuel.

In turn, corn buyers such as ethanol

plants can use maps that show where corn

is for sale. Each green point indicates a zip

code, and the size of the point’s shadow

shows the relative quantity available at that

location. Through MarketPoint, the corn

buyer can also locate high-starch varieties

to help maximize efficiency. The major

benefit for the plant is the efficiency of

using the Web platform. “The buyer can

originate grain with six keystrokes rather

than 300 calls,” Foresman says. A bid can

be electronically delivered to a farmer’s

computer and cell phone. If the farmer isn’t

at the computer, he can call a toll free num-

ber to accept the bid. Other features for the

buyers include the ability to put quotas on

a bid so they don’t overbuy, as well as tying

an electronically placed hedge to a pur-

chase to eliminate slippage in risk man-

agement.

With the trial period concluded in

south-central Nebraska, Foresman says

the program is ready to expand. The

Pioneer sales staff began enrolling farmers

in the rest of Nebraska and Iowa in late

summer, and once a sufficient number is

enrolled, Pioneer will begin signing up buy-

ers. “At this point, there is no fee to either

party,” Foresman says. “What we want is

the opportunity to earn the farmers’ busi-

ness and learn what grain buyers are look-

ing for.” It also appears that the system will

award farmers using Pioneer’s high total

fermentable corn varieties with better pric-

ing. MarketPoint will allow growers to trade

corn hybrids other than Pioneer products

but will post quality characteristics based

on genetics such as ethanol yield potential

and digestible energy for livestock feeders

only on Pioneer products.

Pioneer is also offering farmers a

best practices training program in harvest,

storage and delivery to preserve grain

quality. Those who take the course and

sign a commitment for quality get a “Grain

Quality Certification” designation on their

MarketPoint listing. Growers participating

in MarketPoint have access to reports

summarizing their grain sales for the year,

as well as cell phone text message alerts

on commodity prices, daily basis ranges

and bid acceptance.

MarketPoint is an additional service

offered on Pioneer’s GrowingPoint Web

site. Growers don’t have to be customers

to access the information on the site such

as crop management tips, weather fore-

casts and data, market information, and

agricultural news.

—Susanne Retka Schill

Matching Corn Buyers, Sellers Electronically

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL INC.

I N T E R N A T I O N A L

DISTILLERS GR AINSCONFERENCE & TRADE SHOW

www.distillersgrainsconference.com

a BBI International event

October 19 – 21, 2008Indianapolis Marriott Downtown

Indianapolis, Indiana, USA


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Jay Shetty was “pleasantly sur-

prised” to hear his name as the Award

of Excellence recipient was

announced during the 2008

International Fuel Ethanol Workshop &

Expo held in Nashville, Tenn., in mid-

June. The award, established by BBI

International Inc. in 2000, is presented

annually to someone who has con-

tributed significantly to the ethanol

industry through research, technical

advisory or development. Honorees

are selected by a group of industry

professionals and academic scientists.

Shetty has dedicated the past decade

of his life to work at Genencor, a divi-

sion of Danisco, and has contributed

to more than 35 patents and numer-

ous research publications during his

career in the ethanol industry.

Michael Ardige, head of research

and development at Genencor, said

Shetty is a “joy to be around,” and that

he brings a level of energy and excite-

ment to the industry that few people

can match. “Jay is one of the more

inventive people in our organization,”

Ardige says. “He bridges the market-

place and the basic technology. He

knows the customers, their plants and

their problems, and he brings that

back to the [research and develop-

ment] team in a way that stimulates

product design and invents something

useful to the industry.” Because of

Shetty, Ardige says Genencor is

assured that its inventions have real-

world applications.

Q: What does being selected as

the recipient of the Award of

Excellence mean to you?

A: Receiving this award has been a

great honor to me. It is also the recog-

nition and appreciation from the

ethanol industry that I share with my

many colleagues at Genencor for their

contributions.

Q: When did you start work at

Genencor, and what were you

originally hired to do?

A: I began working at Genencor in

September 1996. My responsibilities

at that time included developing a new

application and market for specialty

enzymes.

Q: How has your job changed

since you started working with the

company?

A: I started in research and develop-

ment. Then, as the years went by,

there was a natural progression in my

career into marketing and sales. I

became head of marketing and sales

for the Asia Pacific Region for grain

processing. Then, the perfect progres-

sion occurred when I moved to head

the Global Grain Processing

Application and Technical Group.

Q: What are you currently working

on?

A: I am currently involved with several

projects, including the development of

novel enzyme technologies resulting

in reduced energy consumption,

increased fermentation carbon con-

version efficiency (raw materials) and

value-added coproducts in ethanol

production using agricultural raw

materials. I’m also working on a new

enzymes application for producing

value-added functional ingredients

from carbohydrates.

Q: What have been some

challenging experiences in your

career in the ethanol industry?

A: Moving technical advances in pro-

cessing technologies into traditional

processes, which are influenced by

many factors.

Q: What is the most rewarding

aspect of what you do for a living?

A: I most enjoy training and motivating

freshly employed young coworkers to

get excited during the discovery phase

of their careers because a good foun-

dation is great for a strong future.

Investing in people captures the val-

ues in all directions.

Q: What do you see in store for the

ethanol industry in the next five

and 20 years?

A: Within the next five years, ethanol

plants will transform into biorefineries

that are capable of producing both fuel

and value-added food ingredients. In

20 years, there will be a shift in feed-

stocks as agricultural nonfood feed-

stocks are developed for the sole use

of fuel production.

—Kris Bevill

Passionate About Enzymes

NameJay K. Shetty

TitleApplication Fellow/Vice President

CompanyGenencor, A Danisco Division

HometownPleasanton, Calif.

CareerGenencorPalo Alto, Calif.Application Fellow/Vice President1996-present

Solvay EnzymesElkhart, Ind.Vice President/Head of Research andDevelopment1989-1996

Miles LaboratoryElkhart, Ind.Senior Staff Scientist1981-1986

Cornell UniversityIthaca, N.Y.Senior Research Fellow1977-1981

www.api.org/aceWhere Eco-Friendly Meets User Friendly.TM

The API Credit Exchange is the convenient and secure way to find and post requests tobuy or sell Renewable Identification Numbers (RINs), file renewable fuels reports, keep

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RISE AND SHINE.

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With the price of gasoline rising and no end to

this trend in sight, consumers may be considering trading in large

gas-guzzling vehicles for smaller, more economically friendly

ones. Flexible-fuel vehicles (FFVs) are one option that Adkins

Energy LLC and the Ethanol Promotion and Information Council

want consumers to know more about.

To help educate consumers about E85 and FFVs, the 43

MMgy ethanol plant in Lena, Ill., and EPIC recently teamed up to

organize a promotion consisting of information, incentives, con-

tests, golfing and pizza that aims to educate consumers around

Lena about ethanol, engines and what their best vehicle options

are. EPIC also invited eight local auto dealerships to participate,

representing General Motors, Ford and Dodge, along with sever-

al used vehicle lots. The promotion began May 1 and at press

time was slated to end July 31.

Michelle Gibilisco, promotions and inventory specialist for

EPIC, says the campaign was designed to get information to car

dealerships that sell FFVs and consumers who buy FFVs. “The

goal was to educate everybody on every level so they knew

where they could find [ethanol] and get the information they need-

ed," she says.

EPIC recognized that FFV purchases start at the dealer-

ships. “We created a quick sales guy reference,” Gibilisco says.

“[We prepared information] so [the salespeople] could have it

there at their desks. When customers were asking questions,

they could just look it up.” The decision to purchase a new vehi-

cle is not a small one, she points out. “When you buy your Sony

plasma TV, you’re going to research it before you buy it because

you’re making a large purchase and you don’t want to make the

wrong decision,” she says. “If consumers knew more about

[FFVs], they will be more likely to purchase that car.”

In addition to providing car lots with literature and informa-

tion, a tool was added to EPIC’s Web site at www

.drivingethanol.com that offers an easy-to-use test to educate

people on ethanol and FFV engines. Mechanics at participating

dealerships have been encouraged to visit the site, and the deal-

er with the highest percentage of visitors will receive a $75 pizza

party. “The results are not in yet on that,” Gibilisco noted at press

time. As for car sales, the dealerships’ top salesperson for each

month will receive an 18-hole golf outing package, which includes

Adkins Energy and EPIC merchandise.

Joan Humphrey, accounting and human relations manager

for Adkins Energy, says the goal was to move FFVs off the car

lots and encourage consumers to put ethanol in their fuel tanks

after they leave. Both goals were achieved. “[FFV] sales in May

were tremendous,” she says. “Approximately 50 were sold that

month.” In fact, she said she often hears complaints that there

aren’t enough FFVs being manufactured. As for the purchase of

E85, Gibilisco acknowledges Adkins Energy’s role. “We wanted

[consumers] to know where to find E85 and use it,” she says. “So

Adkins Energy hooked up with a local gas station to give $40 fuel

cards to [consumers] so they would use E85.” Also, hangtags in

the FFVs purchased at the dealerships instruct consumers where

they can fill up with E85.

Indeed, it appears that the pain at the pump caused by high

gas prices has pressured more consumers to ask, “What are

these flex-fuel vehicles everyone is talking about?” In the Lena

area, thanks to Adkins Energy and EPIC, that question is being

answered.

—Timothy Charles Holmseth

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Adkins Energy, EPIC Team Up


There’s an old adage derived

from the venture capital community: “The

money will follow innovation.” Venture cap-

italists follow this fundamental investment

principle by supporting growth in emerging

technology-dependent markets. This phi-

losophy could also apply to investment in

the ethanol industry.

According to a MoneyTree Report

released in April by Pricewater-

houseCoopers and the National Venture

Capital Association—based on data pro-

vided by Thomson Reuters—venture cap-

ital firms raised $625 million in the clean-

tech sector in the first quarter of this year.

“Cleantech” is a broad term used to cate-

gorize alternative energy and fuel markets

such as biofuels, solar power, wind power

and biotechnology sectors. Ethanol and

cellulosic ethanol fall under this large

umbrella, according to John Taylor, vice

president of research and financial affairs

for the NVCA.

Taylor says that since 2002, venture

capital funds have been hitting the “$20 bil-

lion to $30 billion range annually” across

the cleantech sector, which isn’t abnormal-

ly high and right where it should be. “At the

moment, we’re bumping up against the

upper end of that range,” he says. “I don’t

think there are a whole lot of folks that feel

it should be higher than that simply

because there’s nothing happening in the

exit markets right now. This is not an easy

time to be investing.”

In contrast to the venture capital exu-

berance exhibited during the corn-based

ethanol industry build-out of 2005-’06, ven-

ture capitalists appear to be focusing their

attention and investment efforts on emerg-

ing technologies that will advance the cel-

lulosic ethanol industry. Attention to this

market has also been heightened in light

of the Energy Independence & Security

Act of 2007, which was signed by

President George W. Bush in December.

“I haven’t seen a lot of activity by venture

capitalists, nor do I hear a lot of interest by

venture capitalists right now in traditional

corn-based ethanol production,” says Rob

Day, a principal with Boston-based

@Ventures, a venture capital group that

invests in early-stage and mid-stage tech-

nology companies.

Day asserts that venture capitalists

who are paring back their original invest-

ments in corn-based ethanol aren’t com-

pletely divesting but rather “betting on new

bets,” he says. “Venture capitalists are typ-

ically looking for brand new technologies

to bring to market, and with the current

corn-based ethanol market appearing to

mature, they are now exploring other mar-

kets,” Day says.

A strong initial public offering (IPO)

market is critical to venture capital

investors who depend on the public mar-

kets to cash out of their investments. This

year hasn’t been the case as only five

IPOs were filed in the first quarter of this

year. Conversely, there were none filed in

the second quarter—the first time in 30

years this has happened—and it can be

largely attributed to the economic crunch

being experienced in the past six to eight

months, according to the NVCA.

According to Day, the nonexistent

IPO market is temporary. Moreover, the

current state of the IPO market could pres-

ent an opportunity for venture capitalists

wishing to enter the later stages of an

emerging cellulosic ethanol company.

“Temporarily, you’re seeing an increase in

later-stage venture capital dollars being

put into cleantech and cellulosic ethanol

companies because the IPO window is

temporarily closed,” Day says. “Everybody

is seeing that as a means of waiting out the

turmoil in the stock market to make sure

that when the IPO gets out there, there’s

an open set of investors or a possible

acquisition offer.”

For now, Day says venture capitalists

are actively focusing their attention on four

emerging markets: cellulosic ethanol, solar

power, algal biodiesel and second-genera-

tion biofuel such as biobutanol. “Any one

of these could potentially take off, depend-

ing on the ease of which they can scale up

to meet commercialization expectations

within the particular business model that

venture capitalists are involved in,” he

says. “Only time will tell.”

—Bryan Sims

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Venture Capital Remains Robust

56 ETHANOL PRODUCER MAGAZINE SEPTEMBER 2008

SOURCE: NATIONAL VENTURE CAPITALASSOCIATION

Cleantech Investments in 1Q 2008


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There is nothing more

American than independence. Our

country was founded on individual

liberty and the freedom to make our

own choices. For U.S. drivers,

motoring has always been about

freedom.

Now, blender pumps that offer

drivers whatever blend of ethanol

they like are giving consumers who

drive flexible-fuel vehicles (FFVs)

even more choice. This new frontier

in fuel retailing means consumers

have the ability to choose E10, E20,

E30, possibly E40, or E85—free-

dom of choice that will help build

even more demand for ethanol to

help our country reach the goal of

energy independence.

Choosing ethanol is just one

component of the energy independ-

ence initiative that calls for using

only domestically produced fuels

from Jan. 1 through July 4, 2009. By

using domestic ethanol, conserving

fuel and using domestically pro-

duced oil, the United States could

fuel auto transportation for 186 days

in 2009 before needing to import oil.

The ability of consumers to

choose higher blends of ethanol

hinges on the availability of blender

pumps, particularly as the number of

FFVs continues to increase. In fact,

General Motors will offer 18 FFVs in

model year 2009. This is a sharp

increase in the number of E85-com-

patible vehicle models and follows

GM’s commitment to making at least

half its line E85-compatible by 2012.

In a press release, Beth

Lowery, GM vice president of envi-

ronment, energy and safety policy,

reiterated the company’s belief that

producing biofuels, specifically E85,

is the most significant thing we can

do in the near-term to offset future

energy demands. She confirmed

GM is on target to make 50 percent

of its vehicles flexible-fuel capable

by 2012, with one

caveat—that the fueling

infrastructure is in place.

Today there are more

than 1,600 E85 refueling

pumps in the United

States. Through efforts of

organizations such as the

Ethanol Promotion and

Information Council, the

goal is to double this num-

ber within the next 18 to 24

months.

Building the ever-important

fueling infrastructure is where pro-

grams such as EPIC’s Blender

Pump Program come into play. The

EPIC Blender Pump Program sup-

ports the installation of fuel dis-

pensers that offer a combination of

at least two mid-range blends such

as E20, E30 and E40, in addition to

E85.

The program also offers retail-

ers tax incentives up to $5,000 per

dispenser installation. In addition,

EPIC provides qualified retailers with

free media training, talking points,

stylized “e” branding materials and

other promotional materials. To

receive funding, retailers must use

the approved stylized “e” brand label

for all blends. Retailers with existing

blender pumps are also eligible for

funding as reimbursement for instal-

lation expenses. Promotional efforts

tied to blender pump grand opening

events are a key tactic in raising pub-

lic awareness for higher blends of

ethanol.

I invite retailers to review full

details of the South Dakota program

through a webinar at http://www

.drivingethanol.org/promotions/state

_southdakota.aspx. Simply click on

the blender pump webi-

nar button near the bot-

tom of the page and fol-

low the directions to reg-

ister. You’ll then be able

to hear and see the full

presentation.

The availability of

higher blends of ethanol

via blender pumps is also

important to support the

efforts of other ethanol-

friendly companies such as

Enterprise, which has made a

pledge to be a better environmental

steward.

Nationally, the Enterprise fleet

offers 73,000 FFVs. Unfortunately

many of these cars never run on

ethanol because E85 fueling sta-

tions aren’t available. Fueling the

autos with E85 is just part of

Enterprise’s corporate campaign to

become more environmentally

friendly. Last year, the family-owned

business and nation’s largest car

rental company gave $25 million to

create the Enterprise Institute for

Renewable Fuels, which will

research biofuels.

Join the fight for energy inde-

pendence. Offer customers the free-

dom to choose higher blends of

ethanol by installing a blender pump

at retail locations.

Toni Nuernberg is the executive

director of the Ethanol Promotion and

Information Council. Reach her at

[email protected] or (402)

932-0567.

Blender Pumps Offer Freedom of Choice By Toni Nuernberg

Nuernberg


:LE

GA

LP

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SP

EC

TIV

ES

he commodity prices and

other economic considera-

tions challenging virtually all

bioenergy companies are trig-

gering the following ques-

tions:

How does a bioenergy company

maximize cash flow and make debt

payments in the current environ-

ment? Be proactive instead of reactive.

There are almost always expenses avail-

able to cut, and most distressed compa-

nies wait too long to cut them. This could

include reducing employees and con-

tracting with third parties that provide

management or operational services.

Keep the project lender informed

with good and bad news. The current

lender is the best option for additional

financing, or for modification of loan

covenants and repayment schedules.

Open and proactive communication is

critical.

Explore raising capital from current

investors or from domestic or internation-

al private equity funds as a way to recap-

italize the business. Reduced ownership

in a viable entity is almost always prefer-

able to increased ownership in a failed

venture.

Consider leasing the facility to a

viable entity or entering into a sale, merg-

er or joint venture.

Is Chapter 11 bankruptcy a solu-

tion? Sometimes. It creates a short-term

reprieve to prevent creditors from fore-

closing, may eliminate lender and credi-

tor payments in the short run, and may

allow for use of cash collateral if a lender

refuses to allow continued use of receipts

for operations. However, if the company

cannot live off its current cash, Chapter

11 does not generate new sources of

revenue absent agreement of the cur-

rent—or new—lender voluntarily advanc-

ing new financing.

Chapter 11 is expensive. Lawyers,

accountants and other professionals for

the company, creditors’ committee and

sometimes the secured creditor all need

to be paid. It is also difficult to successful-

ly reorganize or liquidate in a Chapter 11

proceeding without the cooperation—to

at least some degree—from the major

lender(s). It is a last resort, but some-

times a necessary one.

Whom do I need to call for help?

Turnaround/restructuring consultants

generally work exclusively with financial-

ly distressed companies and quickly ana-

lyze and implement steps to resuscitate,

stabilize and either restructure, liquidate

or sell a financially-stressed company.

They are adept at the art of managing

cash-flow. They typically are certified

public accountants, former lenders, chief

executive officers, chief financial officers

and even lawyers. Their skills translate

throughout any industry.

Lawyers with experience in corpo-

rate reorganizations and bankruptcy law

are a critical piece of the solution.

Negotiations with creditors and lenders

are often measured against what the var-

ious constituents can accomplish in a

bankruptcy proceeding. They work hand-

in-hand with current management and

turnaround consultants.

Investment bankers may be

required, but are often used to find new

financing or capital, or to find potential

merger partners or a buyer.

What are the three major mis-

takes financially troubled bioenergy

companies make? 1) Not identifying or

responding to the first signs of financial

distress, 2) waiting too long to retain out-

side professionals to address financial

problems, and 3) not retaining the best

professional help available.

James Lodoen and George Singer have

extensive restructuring and agribusiness

experience, and are partners in the cor-

porate reorganization and bankruptcy

group at Minneapolis-based Lindquist &

Vennum PLLP. Reach Lodoen at jlodoen

@lindquist.com or (612) 371-3234.

Reach Singer at [email protected]

or (612) 371-2493.

Financial Restructuring Alternatives

for Bioenergy CompaniesBy James Lodoen and George Singer

This article is only a general summary for information purposes and does not

constitute legal advice. Consult a qualified and experienced legal advisor for your

specific situation or particular questions.

TLodoen Singer

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EQUIPMENT


A grassroots biofuel revolution that’s been brewing in South Dakota for years is on the verge

of sweeping the country. Ethanol blender pumps, considered by many as a means to

increase the demand for ethanol while reducing America’s dependence on foreign oil and

mitigating high gasoline prices, are popping up in various Midwest locations.

By Erin Voegele

Photos by Susanne Retka Schill

64

BEGINNING OF THEBLENDER PUMPS

Sioux Valley Co-op’s Watertown, S.D., station, located along U.S. Hwy 212 on the east

end of town, advertises the price of its midlevel ethanol blends on the station marquee.

EQUIPMENT


nspired by fuel pumps capable of blending No. 1 andNo. 2 diesel, a group of South Dakotans wonderedwhether it would be possible to blend ethanol andgasoline in the same manner. In the mid 1980s this

group, which included Owen Jones, Orrie Swayze and MerleAnderson, who retired from farming 16 years ago and lob-bies for ethanol interests, met while serving on the originalboard of the American Coalition for Ethanol. Together withAllen Kasperson, an engine specialist who has been workingwith ethanol for nearly 30 years, they began exploring thepossibility of blending ethanol and gasoline at the pump.“Many of us had been doing our own splash blending forsome time,” Swayze says, referring to the fact that he, andothers in South Dakota, had been blending E85 and unlead-ed fuel in the tanks of their vehicles for years. Swayze is afounding member and past president of the South DakotaCorn Growers Association and farms near Wilmont, S.D.

Jones, who serves as the ACE treasurer and is partowner in Penrhos Farms in Britton, S.D., approached Dave

Andresen, manager of the 4 Seasons Co-op inBritton, S.D., with the idea. After bringing the

matter to the co-op board, they decided topush ahead. The co-op contacted

WestMor Industries LLC, a Morris,Minn.-based supplier of fuel

blenders and dispensers, whoagreed to install the pump.

I

EQUIPMENT

In March 2006, the first ethanolblender pump in the nation was in opera-tion at the 4 Seasons Co-op. “We knew atthe time of the installation it was a ground-breaking situation, and we certainly had noidea what lay ahead of us,” Jones says.

The pumps give consumers a choice,Swayze says. That’s especially importanttoday as E85 and other midlevel blends arepriced lower than regular-unleaded gaso-line. According to Kasperson, the pumpsalso stimulate the local economy becausemany of the stations work with localethanol suppliers.

Ethanol blender pumps are designedto use existing technology in a new way.Similar pumps have been used for years toblend unleaded gasoline and premiumgasoline into a mid-grade product. What isnew is that the equipment is now beingused to make midlevel ethanol blends suchas E20 or E30 available to consumers.

Although the technology isn’t new,there were some concerns about using asingle hose to pump different levels ofethanol blends. When a retailer offers regu-

lar unleaded gasoline, E10, E30 and E85through a single hose and someone fillstheir tank with fuel, two-tenths of a gallonof fuel remains in the hose after each fill. Ifone person uses the pump to dispenseE85, and the next uses the pump to pur-chase regular unleaded, the person trying todispense regular unleaded will deposit two-tenths of a gallon of E85 into their fueltank. This probably wouldn’t impact a vehi-cle tank, but a smaller amount of fuel foruse in a motorcycle or lawnmower couldcause problems.

This problem can be avoided by usinga multi-hose configuration. “We’ll set themup so unleaded and E10 are always in aseparate hose, away from the higher blendsof ethanol,” says Steve Kleespies, WestMorIndustries’ field service manager. “By mak-ing sure we never run E85 in the same hoseas the straight unleaded or E10, we’ve elim-inated that problem.”

UL CertificationAs the blender pumps and pumps dis-

pensing E85 started to catch on, they

According to CHS Inc., ethanol blender pumps

located at Cenex brand retail sites must be clearly

labeled to show that mid-grade ethanol blends are

for use in flex-fuel vehicles only.

EQUIPMENT

attracted the attention of the UnderwritersLaboratories Inc. In October 2006, ULsuspended its authorization to use the ULseal on components used in devices dis-pensing fuels containing more than 15 per-cent ethanol. Currently, no blender pumpsor fuel dispensers are approved by the ULfor E85 or any fuel containing more than15 percent ethanol.

Dresser Wayne Inc., a Texas-basedfuel equipment supplier, has submitted fueldispensing equipment that meets the spec-ifications and guidelines recommended forE85 for UL approval. The equipment ismade using stainless steel and nickel platedmetals rather than aluminum and alu-minum alloys. Rubber components andseals have also been upgraded to materialscapable of resisting the corrosive nature ofE85. “Basically anything that touches thefuel is different,” says Scott Negley, DresserWayne’s director of North America projectmanagement. “We are probably within amonth now of having a UL approved E85dispenser.” Until that happens, numerousstates have allowed gas station owners to

use standard fuel dispensing equipment toallow the sale of E85 and midlevel ethanolblends before UL approved equipmentbecomes available. The South DakotaDepartment of Weights and Measures wasone of the first agencies to face the issue.Knowing UL approval was beingaddressed, the department chose to allowthe use of standard equipment so long asthe pumps are proven to dispense accurate-ly. A position paper outlining specificrequirements and recommendations wasalso supplied to station owners. In Kansas,a pilot program administered by the state’sDepartment of Agriculture is giving sta-tion owners the opportunity to installethanol blender pumps. As part of the pro-gram, the pumps are monitored to ensuresuitability and verify that measurements areaccurate.

It is unclear what will happen whenthe UL approved equipment becomesavailable. Ron Lamberty, ACE’s vice presi-dent of market development, says hebelieves in most cases pre-existing pumpswill be grandfathered in, but any ethanol

blender pumps that are replaced will needto be UL approved. However, it will likelybe up to each state to decide how to regu-late pumps already in operation.

Assistance ProgramsDespite the lack of UL-approved

equipment, some states are offering incen-tives to station owners to install the blenderpumps. A grant program in South Dakotahas been established to assist station own-ers in purchasing and installing ethanolblender pumps, with the goal of adding100 new pumps within the next year.Station owners can receive $2,500 from theSouth Dakota Corn Utilization Counciland an additional $2,500 from the ethanolindustry to purchase the pumps.

Another program, developed by theIowa Renewable Fuel InfrastructureProgram, awards grants to stations ownersin that state to help cover the expense ofinstalling E85 dispensers, blender pumpsand biodiesel dispensers. So far threeblender pumps have been included in theprogram.


EQUIPMENT

In addition, state programs in Georgia, Idaho, Indiana, Maine,Michigan, New York, Ohio, South Carolina and Tennessee are pro-viding assistance to station owners implementing E85 infrastruc-ture.

Station owners may also be eligible for assistance from thefederal level. Section 244 of the Energy Independence & SecurityAct of 2007 calls for the establishment of a grant program to helpretail and wholesale motor fuel dealers with the installation,replacement or conversion of infrastructure used exclusively tostore and dispense fuel blends that contain between 11 percent and85 percent renewable fuel.

Resistance and Legal ConsiderationsStation owners who have installed ethanol blender pumps

acknowledge that some people are using midlevel ethanol blends intheir nonflexible-fuel vehicles, but there have been no known con-sumer complaints regarding midlevel ethanol blends or vehicledamage. “The people who have had blender pumps the longest tellus they have not had a single complaint or warrantee issue,”Lamberty says.

Although the U.S. EPA has ruled that it’s legal to sell midlevelethanol blends for use in flexible-fuel vehicles, it is illegal to use fuelcontaining more than 10 percent ethanol in standard vehicles. In aletter written to the South Dakota Petroleum and PropaneMarketers Association in November 2006, Margo Tsirigotis Oge,EPA’s director of the Office of Transportation and Air Quality,wrote that while the sale of midlevel ethanol blends for use in flex-ible-fuel vehicles is legal, “the use of such blends in gasoline-onlyvehicles is prohibited under the Clean Air Act. … The retailer whohas variable ethanol percentage pumps may be liable for causingsuch violation, whether the misfueling occurs at self-serve or full-serve pumps.”

“We are actively investigating and inspecting retail outlets todetermine if fuel containing more than 10 percent ethanol is being

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68

French, manager of Sioux Valley Co-op, stands next to an ethanol blender

pump at the company’s Watertown, S.D., location.


EQUIPMENT

introduced into vehicles designed for gaso-line only,” says Erv Pickell, team leader forEPA Fuels Enforcement. “We expect tocontinue to perform such inspections andinvestigations, including where we get tipsabout specific stations possibly having vio-lations.”

The U.S. DOE’s Web site clarifies thatresearch is underway to find out whethermidlevel ethanol blends can be used legallyin standard nonflexible-fuel vehicles. Formidlevel ethanol blends to be approved foruse in standard vehicles, the EPA mustapprove a waiver to the Clean Air Act thatclassifies the blends as “substantially simi-lar” to gasoline.

As the blender pumps become morepopular, some resistance has surfaced fromsmall-engine manufacturers and dealers,who worry that pumps could be misla-beled. They also wonder what station own-ers are doing to prevent people with non-flexible-fuel vehicles from using fuel con-taining more than 10 percent ethanol. KrisKiser, the Outdoor Power EquipmentCouncil’s vice president of public affairs,says his organization is concerned aboutproduct failures, safety issues and enginebuild-up. “The last thing we want is E30 inany product not designed for it because itpresents a safety risk to the user and a riskto the equipment,” Kiser says. He goes onto explain that his organization is “not anti-ethanol, but what we don’t like is a prolifer-ation of different kinds of fuels.”

CHS Inc. requires that all ethanolblender pumps located at Cenex brandedretail sites be clearly labeled that the fuel isfor use in flexible-fuel vehicles only. “Ourdecaling reads that any alternative fuelblends are for dispensing only in flexible-fuel vehicles, it is a requirement not a rec-ommendation,” says Doug Dorfman, CHSmanager of marketing and retail develop-ment. “Any mis-fueling would be a viola-tion of the federal Clean Air Act.”

It is imperative that station ownerslabel their blender pumps properly andaccurately. It is also important to educateconsumers about the fuel. Even though

many people are using midlevel ethanolblends in their regular vehicles withoutexperiencing any problems, it is currentlyillegal and will negate the manufacturer’swarrantee on the vehicle.

Looking AheadWhile the small-engine manufacturers

are skeptical, station owners are pleasedwith the response they’ve received once theblender pumps were installed. Since theethanol blender pumps were installed, theWatertown, S.D.-based Sioux Valley Co-ophas experienced a reduction in sales of reg-ular unleaded gasoline, while sales of E10have remained consistent and sales of E30and E85 have increased each month. “Weare happy with it,” says Gary French, SiouxValley Co-op’s manager. “If we were toacquire another station—or build anotherstation—we would definitely put in thesame type of pumps we have at our otherfour locations.”

Other stations have experienced simi-lar results. “We’ve seen quite an increase insales,” says Tammy Satrang, controller atthe Britton, S.D.-based 4 Seasons Co-op.“Not just in sales through the blenderpump, but gas in general at our facility. Wehave a lot more traffic coming through ourstation, a lot more customers just becausethe blends are offered here.”

Since the installation of 4 Season Co-op’s ethanol blender pumps, dozens ofMidwest stations have begun to implementthe technology. According to Kleespies,WestMor Industries has seen a sharpincrease in interest during the past 16months, selling approximately 50 ethanolblender pumps during that time.Considering Minnesota’s plan to requirethe sale of E20 fuel, and various state pro-grams being developed to encourage thegrowth of E85 infrastructure, it is clear thatthe use of ethanol blender pumps willbecome more widespread. EP

Erin Voegele is an Ethanol ProducerMagazine staff writer. Reach her at

[email protected] or (701)

373-8040.

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INDUSTRY

As E10 has gained acceptance as a standard fuel in the

United States, efforts are moving ahead to increase the

amount of ethanol to 20 percent. Several studies have

tested the effects of midlevel ethanol blends on vehicles,

but more work remains to convince naysayers that

midlevel blends are efficient, environmentally friendly

and safe to use.

By Kris Bevill


OVERCOMING

O B S T A C L E SE20’S

INDUSTRY


INDUSTRY

n 2005, Minnesota passed unprece-dented legislation requiring that thestate’s fuel consist of at least 20 per-cent ethanol by 2013. The state

already enforces an E10 mandate and ishome to more than 300 E85 fueling stations.To raise total fuel consumption to a level of20 percent, the state has two choices—con-sume enough E85 to total 20 percent of allfuel consumed or convince the U.S. EPA togrant a waiver to the Clean Air Act and allowE20 to be used in all gasoline.

Expanding E85 availability is a feasibleoption, but has maximum capabilities forethanol usage. An E20 waiver, on the otherhand, would affect not only Minnesota butthe entire nation. If the EPA agrees to con-sider E20 as a new additive, the agency willcertify it and the waiver will apply on anational level.

The process toward gaining an E20waiver, however, is a long one. Many studiesneed to be conducted before the EPA candetermine whether a 20 percent blend ofethanol is safe for all engines. While midlevelblends are available in some parts of theMidwest via blender pumps, any blend ofethanol/gasoline greater than 10 percent hasbeen deemed illegal by the EPA unless it isused in flexible-fuel vehicles. The agencyneeds to make sure that any proposed fueloperates sufficiently and meets its standardsby gaining input from engine manufacturersand researchers.

A study to explore the effects of mid-level ethanol blends was recently concludedby the state of Minnesota and the RenewableFuels Association. The University ofMinnesota, the Minnesota Corn GrowersAssociation, the Council of Great LakesGovernors and others also participated in theyear-long study.

According to Ralph Groschen, market-ing specialist for the Minnesota Departmentof Agriculture, the study was intended tofocus on five areas of concern related toE20—materials compatibility, drivability,emissions, toxicology and durability. A$100,000 budget from the state allowedresearchers to conduct materials compatibili-ty and drivability tests. The RFA suppliedfunding for emissions testing. However, the

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INDUSTRY

money ran out beforetoxicology and durabili-ty tests could be con-ducted and furtheremissions testing is alsoneeded. “It takes mil-lions of dollars to domany of these thingsand we understand that

the [U.S.] DOE is doing a lot of differentkinds of testing that will answer some of thequestions about durability and the rest of theemissions testing,” Groschen says. Hebelieves the EPA has covered the toxicologyaspects in its health effects study that testedthe effects of E10. Groschen says the resultsof the EPA study were supposed to bereleased in 1995, but have yet to be madeavailable. He hopes once that data is finallyreleased, those numbers can be modified toshow the effects of E20 without having tocomplete a new study.

As for the portions of the Minnesotastudy that were completed, the results lookpromising. For the drivability testing,researchers used 40 matched pairs of fuel-injected and hybrid-model vehicles fromFord Motor Co., DaimlerChrysler, GeneralMotors Corp. and Toyota—model yearsranging from 2000 to 2006. One vehiclefrom each pair was fueled with nonoxygenat-ed gasoline, while the other was fueled withE20. Unlabeled refueling cards were provid-ed for each vehicle to maintain drivers’ unbi-ased opinions. Vehicles were driven by bothordinary individuals and experts in drivabilityperformance. Research at the end of one yearconcluded that E20 was effective at poweringvehicles and that the fuel was undistinguish-able in performance compared with nonoxy-genated gasoline.

The materials compatibility portion ofthe Minnesota study concluded that the useof E20 does not present problems for cur-rent automotive or fuel dispensing equip-ment. Researchers compared gasoline, E10and E20 on metals, elastomers, plastics, fuelpumps and sending units. Of the 19 metalstested, only two showed measurable corro-sion rates. All eight elastomer samplesshowed some degree of swell in all three testfuels. Of the plastics tested, only those thatare currently not recommended for use with

ethanol showed significant deterioration.Groschen, who has been involved in

testing and marketing midlevel ethanolblends since Minnesota’s E20 legislation waspassed in 1995, says no conclusions can bereached until more testing is completed. Hebelieves it was vital to conduct the vehicletesting before moving on because if theresults had come back negative, there wouldbe no point in moving ahead. "We don't havethe lion's share of it done, but we have madeprogress, and there's a lot of interest in theconcept of certifying 20 percent blendsacross the nation,” he says. He believes thatthe RFA and the Minnesota governor willofficially request a waiver from the EPA assoon as more significant testing has beencompleted. "In order to make that comeabout we are participating with the RFA andthe DOE and others to bring about data thatwould indicate to the EPA that there is noreason why they shouldn't approve 20 per-cent ethanol gasoline,” he says. Groschensays in order to trigger Minnesota’s E20 man-date, the EPA needs to pass a waiver by 2010.

Some of the federal testing is being con-ducted at the DOE’s Oak Ridge NationalLaboratory in Tennessee. Ron Graves, direc-tor of ORNL’s Fuels, Engines andEmissions Research Center, has beeninvolved with intermediate ethanol blendstudies since June 2007. While testing has yetto be completed, some key preliminary find-ings have been reached. First, Graves says hisresearch team has yet to confirm the so-called“sweet spot” that other testers of ethanolblends claim exists. Previous researchers havesaid that certain blends of ethanol, E30 forexample, provide better mileage thannonoxygenated fuel. ORNL research contra-dicts those claims and instead has shown thatas the percentage of ethanol is increased themileage rate decreases, consistent with thechange in energy density.

Another key finding of ORNL researchechoes the results of the Minnesota study.When it comes to drivability, the average driv-er cannot tell the difference between vehiclesfueled with E20 or non oxygenated gasoline.“That doesn’t mean there aren’t subtle differ-ences,” Graves says. “But that’s what ourresearch is all about.”

Some of the initial ORNL findings have

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75

Groschen

INDUSTRY

surprised to researchers. Of the 13 vehiclestested with intermediate ethanol blends foran interim progress report, none have shownevidence of clogged fuel filters or of mal-function warnings from the vehicle’s com-puter. That’s a positive. On the flip side, test-ing of catalytic converter temperatures atfull-throttle conditions has shown that mostof the vehicles do not apply the learned fuelcalibration for ethanol content at all operat-ing conditions, which can result in catalyststhat run between 25 and 35 degrees Celsius(77 and 95 degrees Fahrenheit) hotter thannormal. Those results have caused someconcern among researchers, but the questionremains of how much of a problem thatmight be over the course of a vehicle’s life.To answer that question, catalytic converteraging will be the subject of a much largertest. Researchers will test the effects ofnonoxygenated gasoline, E10, E15 and E20on 10 different types of vehicles to betterdetermine the long-term effects of highertemperatures under certain operating condi-tions. A total of 80 vehicles will be tested. In

mid-July, Graves expected a contract for thetest to be awarded by the end of the month.

Fuel: Not Just for CarsWhile support for E20 may be growing

among standard vehicle operators, anothersector of the motoring public is harder toconvince. Small-engine manufacturers areconcerned about ethanol blends and they’renot afraid to voice their opinions. Shortlyafter the Minnesota study was released, acoalition of alternative engine associations,manufacturers and consumer awarenessgroups issued a response saying that thestudy was far from complete because it neg-lected to include small engines. Motorcycles,snowmobiles, boats, lawnmowers, generatorsand all other types of small-engine devicescan’t be forgotten when considering anationwide change in fuel, they say, and theEPA needs to take those engines into consid-eration before making a decision.

“We don't have a problem with ethanolas far as E10 goes, but we do know that, atsome point, when you increase the ethanol

content in gasoline you're going to increasethe heat in the combustion chamber,” saysJohn McKnight, director of environmentalsafety and compliance for the NationalMarine Manufacturers Association. “Ourengines run at very high speeds." His organ-ization won’t be satisfied until extensive sci-entific testing on those types of engines isconducted by a third party.

Bob Adrience, technical director at theBoat Owners Association of the UnitedStates, agrees that more testing is needed byindependent parties before any kind of waiv-er can be granted. "There's already a lot oftalk that ethanol eats up this and ethanol eatsup that,” he says. “Let's find out before it'sintroduced. A lot of people feel like they gotblindsided by E10."

It’s common knowledge now, butAdrience points to the detrimental effectsE10 had on fiberglass fuel tanks in boatswhen the fuel was first introduced a few yearsago. He conducted his own testing on a“couple of tanks” and found that E10 notonly destroyed the tanks, but also caused

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M A R K E T I N G



INDUSTRY

major damage to the boat motors. Fiberglasstanks were installed in boats from the mid-1960s until the mid-1980s and today make upless than 1 percent of the total number ofboats being used, according to Adrience.More recently manufactured fiberglass tanksare resistant to ethanol. However, it’s notuncommon for boats to remain in use formore than 20 years, so there is a possibilitythat a new fuel could have long-term effectson boat owners. Adrience says even thoughthe main problem experienced by boaterswho use ethanol-blended gasoline is a tem-porary clogging of fuel filters, many are stillupset. “I think they won't be up-in-armsabout it a year from now, once their tanks areclean,” he says, adding that making the leap toE20 would be a major difference. McKnightsays the boating population can get behindE10 on a national level, “but when we start toget to the increase of [ethanol], there are a lotof questions.”

Motorcycles also have yet to be testedwith E20. The American MotorcycleAssociation is a member-driven organization

and does not conduct scientific studies, butImre Szauter, government affairs managerfor the association, says he receives anecdotalreports from motorcycle riders who saythey’ve experienced problems with ethanol.His association has two major concernswhen it comes to intermediate blends ofethanol—reliability and emissions. “Any kindof testing, whether it's done by people in theethanol industry or disinterested third parties,needs to be done openly so folks can seewhat's going on,” Szauter says. “[They needto] test a broad range of engines so that whenthe results come back they can say they arerepresentative of what's being used in thefield. Then we can say with some certaintywhat to expect. Unless it’s really a broad sam-ple of what's out there, we don't believe thatit will really address all of the issues that willsurface and in the end it's the consumer whowill pay for this one way or the other."

Groschen says Minnesota is leavingsmall-engine testing up to the DOE, becauseit is better funded and well-equipped to han-dle such an extensive study. Graves says the

DOE conducted small-engine testing last fall,but only tested small generators, a leaf blow-er and a line trimmer. More recently, a con-certed effort was completed in which 16engines were run to full useful life. This larg-er effort involved a pressure washer, a leafblower, a line trimmer and a small generator.Testing on motorcycles, boats and snowmo-biles is in the planning stages and shouldbegin in a few months, Graves says. Tests areexpected to be conducted for about one year.

It’s clear that many discussions and stud-ies need to occur before the United States canset standards for a higher blend of ethanol.“As far as the national initiative is concerned,we've started the ball rolling in that direction,”Groschen says. “If it didn't happen until2015, well that would still be progress would-n't it? If we got 15 percent instead of 20 per-cent—15 is more than 10. We’re just trying tomake progress.” EP

Kris Bevill is an Ethanol Producer Magazinestaff writer. Reach her at kbevill

@bbiinternational.com or (701) 373-8044.

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PROFILE


PROFILE

Residents of Watertown, S.D., are basking in the benefits that have accompanied the building of

an ethanol plant on the edge of town. From lower utility bills for city residents to plentiful feed for

surrounding dairy farmers and cattle feeders, Glacial Lakes Energy LLC has had a positive impact

on the community.

Story and Photos By Susanne Retka Schill


Good Neighbors

PROFILE

n ethanol plant on the edgeof a community mightseem to be a recipe forconflict with neighbors,

but residents of Watertown, S.D., haveembraced Glacial Lakes Energy LLC.Perhaps it’s because everyone knowsthe ethanol plant paid back the originalinvestors better than two-to-one in div-idends. Perhaps it’s because they’vegone above and beyond what it takes tobe good neighbors. That’s no small featfor a plant that requires more than 150trucks to deliver corn Monday throughFriday. To ensure there are no line-upsthat could disrupt traffic, the deliveriesare timed so there’s a steady stream oftrucks throughout the 10-hour day.Furthermore, initial concerns that theplant would have an odor problemnever materialized. Standing in theparking lot of the 100 MMgy ethanolplant on a hot summer day, one candetect only a mild odor that can’t bedetected at all a few blocks away.

The Benedictine sisters, who live inthe Mother of God Monastery acrossthe field from the ethanol plant, say thesmell is nothing compared with therendering plant that used to operate onthe south edge of town. There hasbeen an increase in traffic, and of

course, a change in the view from thehill where the monastery overlooksWatertown. Sister Ramona Fallon, pri-oress of the community, wryly notesthe view of the industrial park andadded truck noise does make promot-ing retreats at the monastery for itspeace and quiet a bit contradictory. “Itdoes impact the environment, but is itseverely disturbing our life? No,”Fallon says.

Certainly the livelihood of areafarmers has improved with the additionof a new market for their corn, which

is widely credited for boosting com-modity prices. Farmers aren’t the onlyones who have benefitted from theethanol plant. Every resident ofWatertown has been affected becausethey not only have the opportunity topurchase lower-priced midlevel ethanolblended fuel but they also have lowerutility bills. Having an ethanol plantkeeps utility rates in the city of 20,000reasonable, says Geoff Heig, generalmanager of Watertown’s municipal util-ities. In comparing Watertown’s naturalgas rates with other municipal utilities

A ‘It does impact the environment,

but is it severely disturbing our

life? No.’

—Sister Romona Fallon, prioress of the Mother of God Monastery

PROFILE

of the same size, he estimates that res-idents get a 5 percent savings. On $33million in total natural gas purchases,that amounts to $1.5 million in annualsavings, he says. “The plant’s load is thesame every day, summer and winter,”Heig explains. “In natural gas, the moreyou buy in the summer results in a bet-ter price in the winter.” Glacial LakesEnergy’s impact on the city’s utilities issignificant. “Of our $60 million budg-et, $25 million comes from the ethanolplant,” he says. Of the $25 million,roughly $22 million is for natural gas,

$2 million for electricity and $1 millionfor water. The ethanol plant uses twicethe amount of natural gas as the wholetown uses collectively, Heig says. Whilemany people are concerned about thewater demand from an ethanol plant,Heig says at 500 gallons per minute, theplant is the city’s largest customer, “butit’s not a significant amount like the gasusage.” The city is currently building anew water plant, he adds. “We’re gladto have a customer [like the ethanolplant] that’s helping to pay for it.” Theplant also directly benefits the city in

another way, Heig adds. In addition tothe utility bill, the city collects a 2 per-cent sales tax, which amounts to$500,000 a year, for the city’s generalfund from the ethanol plant alone.

Craig Atkins, president of thecity’s economic development commit-tee, Focus Watertown, cites a numberof other positive impacts from theethanol plant. “It’s helped at every levelof the local economy,” he says. “Withthe difficult economic times of the lastcouple of years, Watertown’s economyhas been stable.” The 70-plus jobs at

The ethanol plant uses twice the

natural gas as the whole town

uses collectively.

—Geoff Heig, general manager ofWatertown’s manicipal utilities

PROFILE

Glacial Lakes Energy don’t make itthe largest employer in town, butthey are quality jobs with high aver-age salaries, Adkins says. The farm-ing community’s increased prosperityis also a plus for retailers in town.

From Atkins perspective, a lot ofsynergies have developed with theadvent of the ethanol plant. Forexample, the rail spur built to servicethe plant to transport ethanol anddistillers grains shipments has attract-ed a plastics molding plant thatreceives its resin by rail. The develop-ment group continues to recruit newbusinesses, looking for opportunitiesto utilize the ethanol plant’s carbondioxide supply. Atkins also creditsthe presence of the ethanol plant inhelping the city land federal fundingfor a truck bypass around the southend of town that had been soughtlong before the ethanol plant wasbuilt.

Big on Ethanol BlendsWith an ethanol plant in town,

Watertown residents support the useof ethanol blends. Shortly afterGlacial Lakes Energy began produc-ing ethanol in 2002, John Sperrystarted tinkering with the go-kartsthat race around the Thunder RoadFamily Park, which he owns with abrother and brother-in-law. Sperrytook one go-kart, drilled out the jetsand adjusted the carburetor so it

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‘It’s helped at every level

of the local economy.’

—Craig Atkins, president ofFocus Watertown


PROFILE

could run on E85. After successfullyconverting one, he switched over all26 of the 6.5 horsepower Hondaengines and seven double carts with9 horsepower engines. “As far as Ican tell, we’re the first ones with con-cession karts that run on E85,” hesays.

The town’s other big promoterof E85 has a long history withethanol. “Sioux Valley [Co-op] wasthe first [gas station] in South Dakotato offer E10 back in the early ’70s,”says Manager Gary French. Thecooperative installed a blender pumpthree years ago at its station on theeast side of Watertown. “It wasn’t sixmonths after that and people wereasking, ‘When are you getting themover at our other locations?’” Frenchsays. There’s been a steady increase inthe gallons of ethanol sold by thecooperative, which receives itsethanol directly from Glacial LakesEnergy. French says that the sale ofunleaded gasoline without ethanolhas dropped while E30 sales haveincreased each month. E10 sales areholding steady and E85 has increasedsome. The ethanol plant is acceptedin the community, he adds. “A lot oftimes when something like thiscomes to town you have people bad-mouthing it,” he says. “That’s prettymuch nonexistent.”

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‘As far as I can tell, we’re the first

ones with concession karts that

run on E85.’

—John Sperry, co-owner of Thunder Road Family Park

PROFILE

On the FarmFrom the farmer’s point of view,

the ethanol plant has been good, saysVincent Ries, chairman of the board atSioux Valley Co-op. “It’s brought theprice of corn up for farmers,” he says.As he fills his pickup with $55 worth ofE85, he points out that the price wouldhave been $20 higher if he were fillingup with regular gasoline, and perhapseven more. “They say fuel would beeven higher if it weren’t for ethanol,”he says referring to studies including apaper published by Iowa StateUniversity saying that ethanol produc-tion has reduced gasoline prices at thepump from 29 to 40 cents a gallon,depending on the region.

While in some areas livestock pro-ducers oppose using corn to produceethanol because it has contributed toan increase in prices, in Watertown,they see the plant as one big feedprocessor. Brothers Greg and JimMoes are expanding their dairy farmeast of Watertown so they can bring afifth generation into the operation.They hope to move into a new facilitythis fall and build their herd up from350 to 2,200 cows. Shortly after theethanol plant opened, the Moes beganpurchasing distillers grains to feed theirown dairy cows and soon were mixingcustom rations for other cattle produc-ers who wanted to use distillers grains.They now have five live-bottom trucks

that haul six to eight loads daily fromGlacial Lakes Energy’s plants inWatertown and Redfield. Their venturehas created new jobs and supportedgrowth in livestock feeding in the area.“It used to be everybody was shippinglivestock out to the big feed yards,”Greg Moes says. “Now you go up anddown the road and they’re feeding dis-tillers grains. They used to have togrind corn if they were going to feed,but now they haul corn to the ethanolplant and bring it back alreadyprocessed.” Moes says the modifiedwet grains is a good product to feedwith alfalfa and makes for a consistentfeed that the cows like. It also elimi-nates the need to add high-priced min-

‘A lot of times when

something like this comes

to town you have people

bad-mouthing it. That’s

pretty much nonexistent.’

—Gary French, left, manager ofSioux Valley Co-op, with VincentRies, chairman of the co-op.


PROFILE

erals and soybean protein supplements.With their heifers, they’ve taken it astep further and replaced the corn andalfalfa ration with distillers grainsmixed with corn stalks and wheat straw.His only concern is that because of thegrowth in the livestock industry, theremay not be enough distillers grains tosupply all of them.

Lakness Land and Cattle, 20 milessouthwest of Watertown, sells about athird of its corn crop directly toethanol plants, including Glacial LakesEnergy and others in eastern South

Dakota. Another portion is sold tolocal elevators that ask the Laknessesto deliver the corn to ethanol plants.Like the Moes, the Lakness family sellscorn and brings back distillers grainsfor the cattle. “The cattle know if youdon’t have it in the feed,” MariettaLakness says. “It’s sweet and it has highenergy.” Marietta handles the financesfor the operation, which consists ofher and her husband Nathan, hisbrother Joe and wife Renee, and thebrothers’ parents Milton and BenitaLakness. She remembers well the

research that went into their decisionto invest in ethanol when times weredifficult. “We were faced with lowcommodity prices and coming off acouple of years recovery from flood-ing,” she says. The Laknesses hadinvested in other projects in the pastthat hadn’t worked out, so theyresearched ethanol and attended sever-al meetings before investing. Althoughthey were well-schooled in the ethanolprocess by the time it came to invest, itstill meant borrowing money after astreak of bad crop years. Even thoughthe point of investing in ethanol is tobuild a local market, farmers are mostlikely to invest in land and machinery.“It was a risk for a lot of farmers toinvest in ethanol, to diversity their dol-lars,” she says. The minimum invest-ment was for 5,000 shares at $2 pershare. Ultimately, Glacial Lakes Energyattracted 4,000 investors from acrossSouth Dakota, with the majority com-ing from the immediate region. Theplant was built at the right time, and inthe good years paid back 200 percentto investors. According to GlacialLakes Corn Processors’—the coopera-tive that wholly owns Glacial LakesEnergy—Web site nearly $50 millionhas been paid out in dividends since

‘It used to be everybody was

shipping livestock out to the big

feed yards. Now you go up and

down the road and they’re

feeding distillers grains.’

—Greg Moes, right, dairy farmer, with his brother Jim Moes


PROFILE

the plant opened. “These are returnsthat stayed in the state,” Lakness says.“How many times did that turn over inthe community?” In her opinion,ethanol is a great opportunity. “We’reinvesting in a multimillion dollar com-pany that’s 20 miles away, and we can

go to the annual meeting. We have theopportunity to have hands-on involve-ment. We have neighbors on the boardof directors and what they’ve learnedthey can carry back to their own oper-ations.”

Lakness points out that many local

elevators also benefitted by investing inthe plant and by purchasing grain todeliver to the plant. “Our dividendsfrom local co-ops have increased,” shesays. The rural economy has benefitedby the grain sales staying local, and bythe narrowing basis—an indication ofhow the spread between the futuresmarket and the local cash price has nar-rowed due to increased local demand.

In rural communities such asWatertown, S.D., it is apparent ethanolhas benefited corn farmers and the live-stock industry, and proven that anethanol plant can be a good neighbor. EP

Susanne Retka Schill is an EthanolProducer Magazine staff writer. Reach her

at [email protected] or

(701) 738-4922.

‘It was a risk for a lot of farmers

to invest in ethanol, to diversity

their dollars.’

—Marietta Lakness of Lakness Land and Cattle

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TECHNOLOGY


The Challenge X: Crossover to

Sustainable Mobility competition

completed its fourth and final year in

May. EPM talked with some of the teams

who used E85 to gauge their opinions about

using the renewable fuel.

By Bryan Sims

Photos By Roy Feldman

XChallenge : The Last Lap

Texas Tech University’s car, left, and University of Akron’s car compete during the

acceleration portion of the Challenge X competition in Englishtown, N.J., in May.

TECHNOLOGY


s the U.S. automotive industry strives to meet increasedCorporate Average Fuel Economy standards as pre-scribed by the 2007 Energy Independence & SecurityAct, some of the brightest college minds across North

America have been tapped to help achieve these goals.Their assignment is to change the future of the automotive and

transportation industries by reinventing a vehicle and making it moreenvironmentally friendly and energy efficient. The resources the stu-dents had to work with were a Chevrolet Equinox, $25,000 in seedmoney, a General Motors Corp. adviser and the freedom to deployany novel technology they choose. This is the task that GM and theU.S. DOE gave to 17 student engineering teams across the United

States and Canada during the Challenge X: Crossover to SustainableMobility competition. Since 1987, the DOE, Natural ResourcesCanada and various academic and industry partners have sponsoredmore than two dozen engineering competitions.

For the Challenge X competition, students followed a modifiedversion of GM’s Global Vehicle Development Process—theautomaker’s real-world vehicle development and engineeringprocess—to guide their design and development activities using aGM-donated 2005 Equinox. The event challenged students to devel-op innovative advanced propulsion systems to maximize the vehicle’sfuel economy and reduce emissions and greenhouse gases (GHGs)while maintaining or exceeding the vehicle’s stock utility and per-

A

TECHNOLOGY

formance. The challenge was co-sponsoredby GM and the DOE along with several oth-ers, who supplied cutting-edge technologyand support, including software and hardwarecomponents.

The first year of the program, whichbegan in 2004, focused on vehicle simulation,modeling and subsystem development, andtesting. Year two focused on powertrain devel-opment and demonstration of the energy useand emissions goals of the competition. Thethird year required further refinement withthe goal of delivering a “showroom” vehiclethat was appealing to consumers. In this, thefourth and final year, students focused on cus-tomer acceptability, and over-the-road reliabil-ity and durability of their advanced propul-sion systems. The vehicles were then tested byparticipating in drag racing, autocross and a400-mile road rally from New York City toWashington, D.C.

Mississippi State University, for the sec-ond consecutive year, took first place honorsusing B20 in tandem with a 2.0-liter four-cylinder spark ignition engine. The other 16teams that participated included: University ofCalifornia, Davis; Michigan Tech University;University of Akron, Ohio; Texas TechUniversity; Pennsylvania State University;University of Waterloo, Canada; University ofMichigan; University of Tennessee; Rose-Hulman Institute of Technology; WestVirginia University; University of Tulsa;Virginia Tech University; San Diego StateUniversity; University of Texas; Ohio StateUniversity; and University of Wisconsin,Madison.

MSU earned 817.1 points out of a possi-ble 1,000 while the runner-up, the Universityof Wisconsin, was awarded 742.8 points.Ohio State University came in third, while theUniversity of Waterloo and the University ofTulsa came in fourth and fifth respectively toround out the top five. Twelve teams usedsome sort of biodiesel blend while only threeteams—Texas Tech University, Virginia TechUniversity and the University of California,Davis—used E85 in their tanks. UC-Daviswas the only team to employ plug-in hybridtechnology as its energy source in conjunctionwith E85.



TECHNOLOGY

GM recognizes how valuable thecompetition is for advancing the growthof tomorrow’s vehicles. Not only do thestudents gain precious knowledge fromhands-on experience, they also acquirethe skill sets needed to find a career withautomakers such as GM, according toForrest Jehlik, Challenge X lead techni-cal coordinator and research engineerfor the Advanced Powertrain ResearchFacility at Argonne NationalLaboratory, a competition sponsor.

“The forefront of everything any-body in the industry is doing, these stu-dents are doing right out of the gateand some of them have rapidly becomeexperts in this field,” Jehlik tells EPM.He is also a veteran competitor of the

event and participat-ed in the 1997Propane VehicleChallenge and the1998 Ethanol VehicleChallenge. He wasthe team captain forboth years for UC-Davis. “Simply

because of the competition, they’re ableto get that skill set, where they can jumpright in and get to work and make a sig-nificant contribution immediately to theindustry,” he says.

The teams that used E85 addressedthe advantages and disadvantages they

encountered in their efforts to improvethe future of E85-capable vehicles.

Taking on TechnicalChallenges and Reaping the Benefits

The participants employed severalnovel ideas into their designs, and usedtechnologies that could lead to real-world solutions to reduce well-to-wheelenergy consumption, petroleum con-sumption and tailpipe and GHG emis-sions, and increase pump-to-wheel fueleconomy. In addition, all 17 teamsselected hybrid vehicle designs, some ofwhich go beyond those being consid-ered by the original equipment manu-facturers (OEMs). Their designsspanned the scope of parallel through-the-road designs and other hybrid elec-tric vehicle series designs.

During the program’s first year,Virginia Tech’s Hybrid Electric VehicleTeam, which took eighth overall in theevent and first place in 2006, decided touse a split-parallel hybrid architecturethat would use E85 fuel with the help oftwo electric motors. Its high-voltagebelted alternator/starter (BAS) wasbelted directly to a SAAB 2.3-literengine coupled to a five-speed manualtransmission that powered the frontwheels. At the same time a rear tractionmotor supplied power to the rear

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95

Mississippi State University engineering students pose for a photo in the back of their vehicle before

the start of the Challenge X competition. Pictured in front, left to right, are team leader David Oglesby,

Michal Trcalek and Matthew Young; in back, left to right, are Liza Sisson and Jenna Grantham.

Jehlik

TECHNOLOGY

wheels in order to maintain all-wheel-drive capabilities and toprovide performance assistance. The configuration also enabledthe vehicle to use both motors in parallel power paths to assistthe engine or allow use of a series of power paths when the BASis used to charge the 336-volt nickel metal hydride battery pack.

According to Mark Johnson, a mechanical engineeringgraduate student and Challenge X team leader for Virginia Tech,his team took advantage of E85’s inherently high octane level.“Our engine is calibrated by SAAB and it’s manufactured to run

at a higher power level on E85 compared with premium unlead-ed so we get about 25 extra horsepower—or about 10 percentextra power using E85,” Johnson says.

As for disadvantages, Johnson says the team had to increasethe size of the fuel tank because E85 isn’t as energy dense as reg-ular gasoline. “That’s the disadvantage of the energy contentand the upstream energy content of the fuel,” Johnson says.“Since we were judged on a well-to-wheel basis, the productionenergy required to make E85 was a big hindrance to us.”

Despite encountering an electrical system failure, VirginiaTech had one of the highest well-to-wheel petroleum displace-ment evaluations this year. Last year, the team achieved a 77 per-cent reduction in petroleum energy use, which was a critical winfor the team, according to Johnson. “I’d say the major improve-ment from 2007 to 2008, despite the fact that we broke down atthe competition, was reliability,” Johnson says. “We had put afew thousand miles on the vehicle during the spring semester,which is something we never did in the past. We were able to geta lot of test data from that and to really refine our system.”

Eleventh-place finisher Texas Tech just completed its 20thyear as a participant, designing a hybrid-electric vehicle poweredby a GM-donated 2.4-liter I-4 (L61) SI engine fueled with bothhydrogen and E85. According to Tim Maxwell, Texas Tech’smechanical engineering faculty adviser for the Red RaiderChallenge X team, the students chose hydrogen with E85 main-ly as an assist for cold starts. The team also tried injecting small

Virginia Tech's hybrid vehicle competes during the acceleration portion of the

Challenge X competition.

TECHNOLOGY

amounts of hydrogen in cruising conditions with E85 beingused later, he says.

“We chose E85 with hydrogen because of the well-to-pump and the pump-to-wheels advantages and they seem tomatch because we got the carbon dioxide reductions from theE85 and then we got clobbered a bit for the hydrogen onboard,” Maxwell says. “We wanted to get the best power wecould. We didn’t do anything to the engine other than change theinjection system so we probably lost a little power there.”

UC-Davis designed a front powertrain by replacing thestock 3.4-liter engine with an E85 tuned 1.5-liter Atkinson cycleengine, a UC-Davis-specific custom design continuously vari-able transmission (CVT) and a UQM Technologies Inc. electricmotor. The vehicle’s battery pack was an easily rechargeable 346-volt, 16 kilowatt per hour GAIA Technologies lithium-ion bat-tery that provided 40 miles of electric range. The team placed16th overall in the field.

“UC-Davis probably had one of the most complex config-urations with their plug-in hybrid,” Jehlik says. “That team camea long way this year.”

Looking Ahead to ‘NeXt’ YearWith the Challenge X series completed, the students are

now turning their focus to next year’s competition aptly dubbed“EcoCAR: The NeXt Challenge.” Students who participate inEcoCAR will design and build advanced propulsion systems

into a GM-donated 2009 Saturn Vue crossover based on theCalifornia Air Resources Board’s zero emission vehicle regula-tions. Similar to Challenge X, students are encouraged to explorea variety of solutions, including electric, hybrid, plug-in hybridand fuel cells. Additionally, they will incorporate lightweightmaterials, improve aerodynamics and utilize alternative fuelssuch as ethanol, biodiesel and hydrogen. Some schools havealready begun the initial design work of their vehicles for thenew three-year competition.

As for Challenge X, the hard work that went into it by thestudents, their advisers, sponsors and everyone involved won’tbe forgotten, according to Jehlik.

“It’s been an amazing competition and it’s been an honor towork with these students and sponsors who have put theirhearts and souls into the event,” Jehlik says. “At the end of theday, for every ounce of sweat and tears, these students are com-ing out and going into the industry becoming the change that weall need and want to see.”

Maxwell echoes Jehlik’s sentiments. “It’s been a lot of fun,”he says. “The students learn a tremendous amount that you justcan’t learn in the classroom.” EP

Bryan Sims is an Ethanol Producer Magazine staff writer. Reach

him at [email protected] or (701) 738-4950.

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FRACTIONATION


PHOTO: ICM INC.

An aerial view of the food processing and ethanol production complex in St. Joseph, Mo.,

owned by ICM and LifeLine Foods, where ICM's food and fuel technology package was born.

FRACTIONATION


Two years ago, ICM Inc. began a project to integrate a 40 MMgy ethanol plant with

an existing food-processing facility. The same engineering firm that standardized

the dry-grind ethanol plant design now prepares to deploy its latest technology

package—and dry fractionation is just the beginning.

By Ron Kotrba

Food and FuelTechnology Bundle

FRACTIONATION

thanol producers know howridiculous the food-versus-fuel debate is, considering athird of the incoming corn

they process goes out the back door asanimal feed for cows, pigs and chickens.Do the mainstream media know thesecows and chickens are raised to be eatenby humans, making them food? If thenotion of “fuel and feed-for-food pro-duction” isn’t clear enough ICM Inc., aleader in dry-grind U.S. ethanol plantprocess design, is doing its part to clarifyany confusion. It’s not doing this ascharity to the industry though.

Not long ago ICM downsized by750 employees, a striking impact of theindustry’s slowdown. At the May 2008Distillers Grains Technology Councilsymposium in Kansas City, Mo., DennisVander Griend, the brother of ICM’sChief Executive Officer Dave VanderGriend, said very clearly “We’re lookingfor work.” He meant that the the build-ing bubble of 2005-2006 had burst andICM needed to roll out its next success-ful design—the food-and-fuel technol-ogy package that it’s calling the PKOprocess. “It’s just an acronym we gaveit,” Dave Vander Griend says. “It does-n’t stand for anything.”

ICM officially unveiled PKO inNashville, Tenn., at the InternationalFuel Ethanol Workshop & Expo inmid-June, where the company hostedmeetings with 28 private ethanol plantswishing to learn more. “From those, wereceived seven letters of interest,”Vander Griend says. “Now we’re goingto the next level with those plants tolook specifically at what makes themost sense for those facilities.” Thecompany calls dry fractionation the“key facilitator” to its new technologybundle of varying fashions.

Part One: Dry FractionationThe PKO display model is in St.

Joseph, Mo., where more than twoyears ago ICM bought 49 percent of a

food-processing cooperative calledLifeLine Foods, and colocated a 40MMgy ethanol plant on-site. Dry frac-tionation separates some of the cornstarch to produce snack grits and cornmeal for companies like Frito-Lay tomake its corn chips, and the remainderis diverted to industrial ethanol process-ing. According to Jeff Scharping withICM product development, who gave apresentation at the DGTC symposium,the St. Joseph plant also sells its germto Cargill Inc. for $350 a ton, and Tysonis purchasing the low-germ, low-fiberdistillers grains for $225 a ton (May2008 price). The plant has been in oper-ation for eight months. In that time,Vander Griend says, “We’ve been deter-mining the life cycle of the equip-ment—the reliability, performance andthe efficiency of the dry fractionationportion—and we now have that infor-mation, and we’re comfortable with it.We’re comfortable enough to say we’vedone enough research and monitoringto take it to market.”

The NationalCor n - to -E thano lResearch Centerreceives endospermsamples from theICM dry fractiona-tion process, and anNCERC researcherduring this year’s2008 DGTC conference said there arevariations, which was cause for con-cern. Dennis Vander Griend respond-ed, saying there is still work to accom-plish in quality control. When EPMasked Dave Vander Griend about this,his response was “You will always havea wide variation in starch based on theparticular hybrid—the type of cornbeing grown. That won’t change. Theability to understand it with infraredtechnology and such that bothMonsanto and DuPont have come outwith, the ability to understand the dif-ferent varieties and different oil, starch

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FRACTIONATION

and protein concentrations, will allowfor selection and compensation to thefarmer—but it’s not something we’redoing today.”

The LifeLine project converted afood-processing facility to house anethanol plant. With its operating experi-ence there, ICM now seeks to replicatethe success by outfitting existing fuel-grade ethanol plants with dry fractiona-tion technology meeting (food-gradestandards). “What we’re trying to do inour front-end fractionation technologyis to maintain AIV standards—food-grade standards—so options are notlimited down the road; so the plant cango food grade if, say, its location is rightand the marketing opportunities at theparticular site would allow productionof a coproduct for sale to a foodprocessor in the area,” Vander Griendsays. “If the plant has the cleaning andseparation equipment and everythingelse, they can pull off a stream of corngrits or meal for that purpose. If you’ve

got a food-grade front end, you’d havethat opportunity. We’re trying to keepthe most options open to our cus-tomers.”

Subsequent Pieces to the Technology Package

There are advantages availablebeyond new food processing capabilitiesthrough dry fractionation, ICM says. “Aguaranteed increase in ethanol produc-tion capacity; reduced natural gas con-sumption; decreased enzyme usage; aplatform for emerging technologies; anda bridge to cellulosic ethanol,” accordingto an announcement the companyreleased in June. The increase in ethanolproduction results from passing onlystarch through the fermentation tanksinstead of whole ground corn. Scharpingsaid a 100 MMgy to 115 MMgy ICMethanol plant when outfitted with dryfractionation, could produce 130 MMgy.Of course, this necessitates the purchaseof more corn.

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FRACTIONATION

Reducing natural gas consumptionas a result of ICM’s food and fuel tech-nology bundle would largely arise fromthe installation of a biomass gasifier uti-lizing the fractionated corn fiber, or hulls,for process steam. “Some will want totake the fiber and put it into cattle feed asa supplement,” Vander Griend says. “Butmost ethanol plants are located were thegrain is—Iowa and Illinois—wherethere’s not a lot of cattle.” The St. Josephplant is gasifying its corn hulls, and BillTietze with Primenergy, the companythat supplied the gasifier for the ICMLifeLine Foods plant, says every hour14,000 pounds of dry-fractionated sepa-rated corn fiber is fed to the Primenergygasifier, making 60,000 pounds of steam

per hour—about half the steam requiredto operate the plant.

Enzyme reduction work is goingextremely well, according to VanderGriend. “We’re looking at differentenzyme combinations and cocktails thatimprove the performance of the plant,”he says. “We’re also continuing to refinethe dry frac process to recover morestarch,” which would help boost the con-version ratio from 2.67 gallons of ethanolper bushel closer to the 2.8 number ICMguarantees in its dry-grind plant design.Dry fractionation is also a bridge to cellu-losic ethanol production from cornfiber—ICM was on the list of companiesawarded a “10 percent” cellulosic ethanoldemonstration plant award from U.S.

DOE—and will support additional andperhaps more imminent emerging tech-nologies.

Today, pilot work moves ahead onwhat ICM is calling its PEX unit, whichlike PKO stands for nothing in particular.The PEX unit is being developed for effi-cient corn oil recovery from the dry frac-tionated germ. ICM is concurrently con-ducting pilot work on its single-cell pro-tein system.

“What we’re doing in our pilot workat St. Joseph is taking our syrup productand aerobically growing protein on it,”Vander Griend says. “We’re convertingthat fiber to a protein so it’s a higher-val-ued feed product. Rather than sellingsomething that’s currently selling dried at

The St. Joseph plant is gasifying its corn hulls, and BillTietze with Primenergy, the company that supplied thegasifier for the ICM LifeLine Foods plant, says every hour14,000 pounds of dry-fractionated separated corn fiber is fed to the Primenergy gasifier, making 60,000 poundsof steam per hour—about half the steam required tooperate the plant.


FRACTIONATION

it and send the endosperm to the ethanolplant,” he says. Even though this could dou-ble the cost of a facility, the revenue streamcould triple.

While this food and fuel technologypackage from ICM appears ideal for plantretrofitting, it is also available for greenfieldprojects and those partially under construc-tion. “Investors won’t even look at a stan-dard plant in Iowa today,” Scharping said,adding that dry fractionation would be agood way for financiers to differentiate proj-ects from conventional dry-grind plants. It'salso ideal for plants that are half-way builtbut are having trouble with revenue,Scharping said, “Coming back and re-wrap-ping dry fractionation technology on it mayhelp add new, additional funding to com-plete the plant.” EP

Ron Kotrba is an Ethanol ProducerMagazine senior writer. Reach him at rkotrba

@bbibiinternational.com or (701) 738-4942.

10 cents a pound in distillers grains, wecould be selling it at 25 cents a pound inthe form of a protein.”

The process design company is pre-pared to sign contracts and get the ballrolling on retrofitting dry-grind ethanolplants, whether those facilities were orig-inally ICM-designed or not. The benefitto retrofitting an ICM plant is that thecompany knows the design intimately,and can therefore integrate the dry frac-tionation equipment quicker, more easilyand for less money. Downtime is virtual-ly nonexistent during the integrationperiod, and can be arranged aroundplanned maintenance shutdowns, thecompany says. In its dry-grind designVander Griend says ICM knew its dryfractionation technology would hit themarket at some point, so space wasreserved at some of the plants inbetween receiving/storage and theethanol plant to accommodate any addi-tional buildings and/or equipment.“Somewhere between those two loca-tions you’ll pull the corn off, preprocess

Spouting carries material from one floor to the next via free-fall gravity, and cyclones drop solids out of

airflow inside the LifeLine Foods dry fractionation facility in St. Joseph, Mo. If bran is being pneumatically

conveyed, a cyclone spins the air out the top and the solid bran falls out the bottom.

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PHOTO: THE DENVER POST

Rocky Mountain Market in Evergreen, Colo., became a popular gas station for

Coloradans when its owner, Roger Guzman, installed E85 and biodiesel pumps.

Rocky Mountain E85


hen Colorado leaders set out to make E85 available to motorists in their state, theyunwittingly developed a recipe for success that other states can use.

In May 2006, Colorado Gov. Bill Ritter Jr. established the Governor’s E85Coalition, which was subsequently re-organized into the Governor’s Biofuels

Coalition to include biodiesel in its efforts. In February 2007, Ritter charged the GBC with quadru-pling the number of biofuels stations and doubling the amount of biofuels sold in 2006.

Stacey Simms, biofuels and local fuels program manager for the Governor’s Energy Office, saysthe GBC took the governor’s request and ran with it. “In February 2007, Colorado had 13 public-pri-vate stations selling biofuels,” she explains. “Today, after more than a year-and-a-half, the Governor’sBiofuels Coalition is proud to announce that Colorado has 94 stations either open or under construc-tion.” That number represents growth not expected until the end of 2008, she adds.

In the spring of 2007, the coalition’s success caught the media’s attention. One of the first sta-tions to add both biodiesel and E85 was in Evergreen, Colo., and was featured in an article in TheDenver Post. “This article served as a business case and testimonial for other station owners consider-ing adding biofuels,” says Megan Castle, director of communications for the Governor’s EnergyOffice.

W

From a good idea, to a better idea, to a comprehensive governor’s coalition, the state of

Colorado has invested in an ethanol economy that’s a long way from the Corn Belt, but

motorists, business owners and foreign countries are taking note of Rocky Mountain E85.

By Timothy Charles Holmseth

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Roger Guzman, a former GBC mem-ber who owns Evergreen MountainMarket, the business featured by The DenverPost, says biofuels gave him, as a small-busi-ness owner, a way to fight back when hewas faced with a big-box retailer installingpumps right down the road. “All those guysare selling gas as a loss-leader,” he says,referring to the marketing technique of los-ing money on a product to lure consumers.“We had to compete with that, so we had tohave some kind of a niche that they didn’thave and biofuels was the solution.”

The results were not only positive butcompelling.

In April 2007, total fuel sales were up66 percent at Guzman’s store, comparedwith the same time period the previous year.The basis for the sudden spike in traffic wasmostly out of support from the public.Motorists who didn’t even own flexible-fuelvehicles were coming in, he says. “Theywould come here [to] support what I wasdoing.”

The attention that Guzman received

after making biofuels available at his gas sta-tion was anticipated in advance by the GBCduring its strategic planning. As each new

station adopts biofuels, the coalition seesthat as an opportunity to reach the publicwith a positive message about biofuels.People in the communities where these sta-tions are located are invited to a grandopening event. “This event highlights thework done by the station owners, educatescustomers on the benefits and availability ofbiofuels and gives local officials the oppor-tunity to highlight the community’s success-ful public-private partnerships,” Castle says.

Although biofuels and E85 are anattractive option for business owners, thecoalition acknowledged that installing theinfrastructure was expensive and devised away to provide some assistance. “The coali-tion offers funding support to the maxi-mum of 35 percent of the net project costsafter tax incentives, but no more than$15,000 per applicant for E85 infrastructureand $10,000 for biodiesel infrastructuremay be awarded,” Simms explains.

The idea of adding E85 had been inthe back of Guzman’s mind for some time,but it wasn’t something that he financially


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Roger Guzman added E85 and biodiesel pumps at

his Rocky Mountain Market to compete with a

big-box retailer that was selling its fuel as a

loss-leader. In April, 2007, Guzman’s fuel sales had

increased 66 percent, compared with the same time

period the previous year.

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could have easily done on his own. “I got aton of help from the governor’s office,” hesays, explaining the financial assistance hereceived from both the federal and stategovernment. “[I received] federal grants forhalf the cost and the write-off from thestate.” The governor’s office also assisted inpublic awareness, he says. He also receiveda lot of publicity as his story appeared onthe local television news in addition to TheDenver Post article.

The GBC’s efforts have led to anincrease in E85 consumption. “With veryfew exceptions, sales of E85 have grown

each and every quarter,” Simms says, refer-ring to positive sales numbers posted bypartnering stations through April 2008.Although volume data hasn’t been gatheredfor April through June 2008, she says, “pre-liminary results show that E85 sales in thestate is trending over 1.2 million gallons amonth.”

Fleets Choose BiofuelsGas station owners aren’t the only

ones who are benefitting from the GBC’swork in Colorado. Art Hale, fleet managerfor the state Colorado and fleet representa-

tive on the GBC, says flexible-fuel vehicleshave become a significant part of the 6,000vehicles in the state fleet. “We currentlyhave more than 700 flex-fuel vehicles in thefleet and plan to order several hundredmore over the next year,” he says. “We justcompleted the installation of our first E85fuel site in downtown Denver that weexpect to help us meet our plan to reducepetroleum consumption 25 percent by2012.”

Hale firmly believes that the UnitedStates should be energy independent.“You need to first ask yourself, ‘What are

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my options?’” he says. “Do we continue to buy petroleum fromunstable Middle Eastern countries where 70 percent of our currentU.S. supply is imported from … or will our money be better spentby buying a product that is renewable and produced here in theU.S.?”

Alan Brown manages a 270 vehicle fleet for the city ofLittleton, Colo., and his desire to use biofuels led him to take a posi-tion on the governor's coalition. “I got the reputation of being a‘groupie’ because I attended meetings persistently as a nonmemberwhile requesting financial support for E85 infrastructure,” he says.Brown says Littleton currently runs 23 flexble-fuel vehicles andpumps E85 at its facility. “We are consciously trying to purchaseflex-fuel vehicles as we need to replace vehicles.”

When E85 comes up in conversations in Colorado coffee-shops, Brown says he’s sometimes the only one in the know. “Themost important question I answer is which vehicles can use E85,”he says. At the same time, he tries to educate people. “I point outthat ethanol has environmental and economic advantages and,while I avoid the food-versus-fuel issue, I try to dispel some myths,”he says.

Meeting the Challenges Putting their success aside, Simms says there have been obsta-

cles to clear and there will probably be more. In October 2006,prompted by the need to establish comprehensive safety require-

ments for an entire E85 dispenser system, UnderwritersLaboratories Inc. suspended its certification for individual parts thatcompose an E85 fuel dispenser. Because of the obvious implica-tions this would have on developing an E85 infrastructure inColorado, meetings were held with the Colorado Division of Oiland Public Safety, the Colorado Division of Fire Safety and the FireMarshal’s Association of Colorado. The matter was resolved bydeveloping published guidelines for E85 pumps until proper testingand certification could be completed.

“Another barrier was to develop an application and funding

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Colorado Gov. Bill Ritter Jr. addresses a crowd at a grand opening celebration

for the Western Convenience Store in Fort Collins, Colo.

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matrix to fairly evaluate project proposals for both public and pri-vate entities,” Simms explains. “The GBC collaborated to createthese criteria from the different entities in determining the fundingallocations for projects.”

Simms notes that the GBC quickly addressed any issues thatpresented themselves, and any challenges that lay ahead will proba-bly be in the public relations area. “The current hurdle is addressingthe media and the public regarding biofuels,” she says. As con-sumers become more frustrated with the rising price of fuel andfood, corn-based ethanol has taken its fair, and unfair, share of crit-icism. “The GBC is working to inform media, local officials and thepublic regarding these negative and often misleading media attackson biofuels,” Simms says.

Indeed there has been controversy and confusion surroundingbiofuels as the nation begins to turn to renewable home-grownenergy sources. Simms says the GBC recognizes that corn ethanolis a bridge to cellulosic ethanol, and that there are other options.“Biofuels, such as E85 and biodiesel, are not the lone solution toour energy, fuel and transportation issues,” she says. “Biofuels,which are a clean, domestic resource, are a part of the solution thatincludes hybrid-vehicle technology, increased mass transit and high-er mileage vehicles.”

An E85 ModelThe GBC believes the steps it’s taken to increase Colorado’s

use of E85 can be emulated by others. “This group has enabled the

state to grow the infrastructure of biofuels sites from 11 more thana year ago to almost 100 sites today,” Hale says. “I would like to con-tinue to increase the number of all government agencies that havepartnered toward these common goals, and continue to search foropportunities that expand infrastructure of all alterative fuels andalternative transportation technologies.”

It seems that Colorado’s success hasn’t gone unnoticed. “Inthe past year, I have been contacted by eight other state energyoffices, dozens of local communities throughout the nation, andofficials from Brazil and Puerto Rico, who want to learn about ourwork here,” Simms says. “What has happened in Colorado—a stateoutside of the Corn Belt—has been inspiring.”

In 2006, Colorado was awarded a Maximizing AlternativeFuels grant from the U.S. DOE to work on the development ofE85 in the state. “By leveraging this with other funding sources, andpublicizing the state and federal tax incentives for infrastructuresupport, Colorado’s program has been recognized as a model forpromoting biofuels,” Simms says.

Simms says the state currently has some 300,000 FFV ownersand they will continue to educate the public on the benefits of uti-lizing biofuels and Rocky Mountain E85. EP

Timothy Charles Holmseth is an Ethanol Producer Magazine staff

writer. Reach him at [email protected] or (701)

738-4952.

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POLITICS


Food, Fuel and PoliticsThe Food before Fuel campaign—designed to convince the public

that biofuels are responsible for rising food costs and to press the

government to rein in its renewable fuels’ mandate—has caused a

lot of heartburn. The question is whether consumers believe that the

companies supporting this campaign are looking out for their best

interests.

By Anna Austin

POLITICS


n the past year, global food prices have increased more than 40 per-cent and gasoline prices have nearly doubled. It’s no wonder peopleare frustrated and looking for someone or something to blame astheir bank accounts dwindle. It didn’t take long before a finger was

pointed in ethanol’s direction, aided by the Grocery ManufacturerAssociation’s Food before Fuel campaign.

The Food before Fuel Web site says that the organization was “createdto urge public officials to revisit and restructure policies that have increasedour reliance on food as an energy source, and to carefully address how todevelop alternative fuels that do not pit our energy needs against affordablefood and environmental sustainability.” Specifically, Food before Fuel sup-ports Texas Gov. Rick Perry, who in late April asked the U.S. EPA to granta 50 percent waiver from the Renewable Fuels Standard ethanol mandate.

The Web site provides various studies, news items and informationabout food prices and the environment all geared toward convincing visitorsthat biofuels production is the No. 1 cause of rising food prices. More than55 different organizations ranging from the National Chicken Council to theTortilla Industry Association are listed as supporting members.

I

POLITICS

Although some visitors to the Website may be convinced that biofuels areeating into their food supply, the U.S.Congress doesn’t seem to be biting. TheSenate Energy and Natural ResourcesCommittee held a hearing on June 12 toanalyze the relationship between the U.S.renewable fuels policy and food prices atthe campaign’s request. The committeerecommended that the RFS ethanol man-date remain as is. Sen. Jeff Bingaman, D-N.M., who chairs the committee, read aletter from U.S. Energy Secretary SamuelBodman and Agriculture Secretary EdSchafer, which responded to questionsposed by Bingaman concerning the rela-tionship of biofuels to food prices and theaffects of gasoline prices. It was noted inthe letter that ethanol and biodiesel con-sumption accounts for only a 3 percent to4 percent increase in retail food prices.

In a press release dated two daysbefore the hearing, the Food before Fuelcampaign used a number generated by theInternational Monetary Fund in a report it

produced in April 2008 to show howmuch biofuels have contributed to theincrease in food prices. “Congressionalpolicies mandate the conversion of morethan one-third of all U.S. corn to ethanol,with additional subsidies and tariffs furtherpromoting the diversion of food to fuel,”the press release said. “Food policy expertsbroadly agree that these policies have con-tributed to record food price inflation, andthe International Monetary Fund reportsthat U.S. food-to-fuel policy is responsiblefor more than 30 percent of food priceinflation globally.”

In their letter, Bodman and Schaferaddressed the IMF’s information statingthat the percentage of retail food costs toconsumers varies from country to countrydepending on diet, and the proportion ofstaples versus highly processed food con-sumed. “The IMF global food commodityprice index is often quoted as an indicatorof the change of global food prices,” theletter said. “It is unclear how the list ofcommodities and the prices used in the

IMF index relate to the foods purchasedand the prices paid for food items by con-sumers in less developed countries.”

The letter from the secretaries alsoconcluded that without biofuels, gasolineprices would be 20 to 35 cents higher pergallon than the current price, citing a TexasA&M University study titled “The Effectsof Ethanol on Texas Food and Feed.”This study concluded that higher energyprices are the major contributor to higherfood prices. “The underlying force drivingchanges in the agricultural industry, alongwith the economy as a whole, is overallhigher energy costs, evidenced by $100 perbarrel oil,” the report found. “The ethanolindustry has grown in excess of the RFS,indicating that relaxing the standard wouldnot cause a contraction in the industry.”Joe Outlaw, a professor and agriculturaleconomist at Texas A&M and one of theauthors of that study addressed the SenateEnergy and Natural Resources Committeehearing, as well as several other energy andagricultural representatives.

POLITICS

While none of the biofuels’ criticsattended the hearing, a new report “RisingCommodity Prices and their Impact uponU.S. Food Inflation” by Bill Lapp, principalof the consulting firm AdvancedEconomic Solutions, was posted on theFood before Fuel Web site once againblaming biofuels for increased food prices.“The underlying driver of the higher com-modity prices in past years (2002-2006)included global economic expansion, ris-ing energy prices, as well as the weak dol-lar,” the report said. “While these pricedrivers remain intact today, the rapidexpansion in the use of corn to produceethanol is currently the most significantfactor driving corn and other agriculturalcommodity prices to record levels.” Lappis a former chief economist for ConAgraFood Inc. and Advanced EconomicSolutions clients include restaurant chains,food manufacturers, distributors, invest-ment firms, agricultural producers andgovernment agencies, according to thecompany’s Web site.

Consumer ConcernThe Food before Fuel campaign

claims it’s not anti-biofuels and is only con-cerned about consumers. When contactedby EPM, a GMA representative said, “Weare all for biofuels, but are supportive ofalternative energy policies that will not pitour fuel needs against our food needs.”Not everyone is convinced that the GMAand other food organizations and compa-nies are looking out for the best interestsof consumers, however, and some of thenations' farm groups aren't happy with thetactics that the campaign is using. In May,the National Corn Growers Associationsent a letter to the GMA requesting that it“stop blaming American farmers andquestioning our collective ability to rise tothe opportunity and challenge, as wealways have, to produce plenty of food,feed, fiber and fuel.” The NCGA also saidthat it respected the GMA’s right to itsopinion regarding America’s biofuels poli-cies and its perceptions of the cost

increase for the grains they use as inputs.“However, those concerns can be sharedin a rational manner and need not be pro-moted via falsehoods regarding food priceincreases, starvation and environmentalconcerns,” the NCGA said. “Please knowthat your campaign is sowing seeds ofdeep anger throughout farmer and ruralcommunities toward food companies.”The letter was also signed by the AmericanSoybean Association, NationalAssociation of Wheat Growers andNational Sorghum Producers.

Ironically, the bottom lines of someof the groups supporting the Food beforeFuel campaign haven’t suffered greatly inlight of higher commodity prices. In June,General Mills reported that in its fiscal yearthat ended May 25, 2008, net sales grew 10percent to $13.7 billion and operatingprofits were up 6 percent to $2.4 billion. Inits first quarter report for 2008, KraftFoods Inc. said its net revenues increased20.8 percent to $10.4 billion and that oper-ating incomes in the fist quarter increased


POLITICS

3.8 percent from the previous year to $1.2billion. Kellogg Co. reported 2008 first quar-ter sales at $3.3 billion, an increase of 10 per-cent from the first quarter of 2007 andoperating profit at $545 million an increaseof 9 percent. Kellogg credited its profits to“business momentum, recent price increas-es and focus on productivity.” When con-tacted by EPM, Kellogg declined to com-ment when asked to elaborate on its “recentprice increases.”

Brooke Coleman, executive directorand co-founder of the New Fuels Alliance

and a food price expert, says the companiesthat are pressing for an ethanol mandatewaiver and insinuating that their main con-cern is consumers, have a much differentagenda. FoodPriceTruth.org was launchedin response to the Food before Fuel cam-paign. Several energy, environmental andagriculture experts, including David Morris,who served as an adviser and consultant tothe energy departments of presidentsGerald Ford, Jimmy Carter, Bill Clinton andGeorge W. Bush, and Lee Lynd, a professorof engineering sciences at Dartmouth

College who has advised policy-makersregarding biofuels and served on anadvisory committee to former PresidentBill Clinton’s administration, are mem-bers of FoodPriceTruth.org.

“Something to think about is whatwill happen if the mandate is removed?”says Coleman, who has been involvedwith transportation fuels at the regulato-ry and policy-making levels in Californiaand other states since 1998. “Yes, thesecompanies say the price of food is sohigh because of biofuels, but nobody issaying that they will lower their pricesfor consumers if corn prices are low-ered, which is silly and won’t happen,”he says. “What you are going to get bysuspending biofuel policies is no impacton corn or international grain prices, butthe price of food will increase becausefuel prices will rise.”

Coleman says these big food com-panies are simply pretending to be onthe side of consumers. “These are thesame companies who have been shrink-ing the boxes of their products, andcharging customers the same price ormore,” he says. “They are profiting atthe hands of a crisis. This whole thing isabout money to them.”

Regarding food needs, Colemansays it shouldn’t be a concern. “Anyonewho knows anything about agricultureor hunger knows that farms are not atfull capacity—the whole idea that theagriculture sector is operating beyondtheir means, and that is the cause ofworld hunger, is absurd,” he says. “Tradeallocations and poverty among otherfactors cause world hunger.”

The Renewable Fuels Association,Canadian Renewable Fuels Associationand the European Bioethanol FuelAssociation agree. “The world’s farmerscan meet the challenges of today’s cri-sis,” the associations wrote in a letter toFood and Agriculture OrganizationGeneral Director Jacques Diouf andother world leaders in June. “The worlddoes not lack for arable land or highlyefficient food production methods.



POLITICS

higher food prices.” Pilgrim’s Pride current-ly owns 25 percent of the U.S. poultry mar-ket, and earned a gross profit of nearly $294million in 2007.

Coleman isn’t surprised that the poul-try industry is pushing for the waiver.“Factory farms and the chicken and live-stock industries have built their empires onthe backs of cheap corn, and have madebillions as a result,” he says. “They enjoyedpaying low prices; now they are going tospend millions beating up ethanol.” Thehigh cost of poultry and livestock feed has

prompted several producers to join the anti-ethanol campaign.

Coleman says biofuels supportersshould speak up, talk to legislators andmake their voices heard. Although it maynot have reached everyone yet, the truth isemerging on its own, he says. EP

Anna Austin is an Ethanol ProducerMagazine staff writer. Reach her at

[email protected] or (701) 746-

4968.

What it lacks are sound internationalagricultural policies that allow farmers,especially in food importing countries,to meet the food demands of their fel-low citizens. Increasing the productionof food and expanding biofuel produc-tion are not mutually exclusive activities.They are complimentary.” The organi-zation also added that the two com-modities most often associated withtoday’s food crisis are wheat and rice.“Neither commodity is a major sourceof biofuel production, nor are theycompetitors for acres with corn andother biofuel feedstocks,” according tothe letter. “You do not produce corn orsugarcane in a rice paddy. The factorsdriving the price of wheat and rice high-er are independent of efforts to developa biofuels industry. These include weath-er-related problems, rising demand andthe price of oil.”

Hidden Agendas?The Houston Chronicle recently dis-

covered, after obtaining 596 pages ofrecords from the Texas governor'soffice through the Texas PublicInformation Act, that six days beforePerry requested the 50 percent RFSwaiver from the U.S. EPA, Texas poultryproducer Lonnie “Bo” Pilgrim donated$100,000 to the Republican GovernorsAssociation. The association is chairedby Perry. The EPA has not made a rul-ing on the request, but has receivedmore than 10,000 comments. Pilgrim,who is the founder, chairman and prin-cipal owner of Pilgrim’s Pride the largestchicken producer in the United States,was later allowed to speak to severalRepublican governors during a privateenergy conference in Grapevine, Texas.In a letter in support of Perry’s waiverrequest Pilgrim had this to say, “Soaringfeed-ingredient costs fueled by the fed-eral government’s ethanol mandate hascreated a crisis in our industry, the trueeffects of which are only just nowbeginning to be felt by consumers inTexas and other states in the form of

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oday’s economic environment is filled with soaringcorn prices, a heated food-versus-fuel debate, legisla-tive uncertainty and other factors dramatically affect-

ing market prices and stability. These market conditionsrequire greater attention to risk management than in the past.No one can predict the markets’ behaviors, but chance favorsthe prepared mind—and so do profits.

Ethanol profitability depends on outstanding commodityprice risk management. The most effective risk managementprogram is custom-tailored to an individual plant, taking intoaccount its actual corn purchases, ethanol and distillers grainssales, the local market conditions for corn supply, the cashpositions that a plant has or will have, and the impact ofbroader energy markets. Additionally, plant managers shouldavoid comparing their plant’s strategies to those of anotherplant as if they are comparing apples to apples. Withoutknowing the underlying motives for their positions, it’s diffi-cult to decode any significant meaning from someone else’srisk management strategies.

The overall goal of any risk management program, ofcourse, is to maximize profitability and competitiveness—notonly in calm markets but, more importantly, among waves ofextremely volatile market conditions. Several factors influencea successful risk management strategy, but I’ve identified sixcommon traits present in successful (that is, profitable)ethanol plants.

No. 1: A producer needs a willingness to use a vari-ety of tools to manage adverse price moves. Not everystrategy or tool works the same in every situation. Using avariety of hedging and risk managementtools gives the plant the flexibility tomatch its own needs with the needs of themarketplace. Some of the tools ethanolproducers use to protect against adverseprice moves are traditional, such as futuresand options contracts. These are particu-larly useful for managing corn positions.Tools available for ethanol hedging havearisen more recently, which limits some ofthe comfort that comes with familiarity. Futures and optionsfor ethanol can be thinly traded, if at all, making them diffi-cult to use.

Many ethanol producers have instead turned to over-the-counter hedge structures that are less well known. In manycases, the liquidity in the over-the-counter market can be manytimes greater than traditional futures markets. Chicago Plattsethanol swaps are an example of an over-the-counter tradethat is actually placed in the ethanol company’s hedge accountand cleared by the New York Mercantile Exchange. This clear-ing function reduces the counter-party risk that can be avail-able in over-the-counter transactions.

Some plants may find over-the-counter transactions to be

RISK

T

Six Traits of SuccessfulEthanol Producers: Keys to Effective RiskManagementBy Tom Wapp

Wapp


RISK

unfamiliar and therefore are reluctant touse them as part of a disciplined hedg-ing strategy. The first thing these plants

should do is diligently learn all they canabout any unfamiliar tool or strategybefore it’s time to utilize the trade.

Decide beforehand, based on a workingknowledge of the strategy, if it is a toolthat plant managers are comfortableusing. Don’t wait until decision time tobecome educated about the tools avail-able to the plant. Doing so means run-ning the risk of severely limiting theplant’s risk management options.

No. 2: Know that one can’t out-guess the markets. Modesty is a virtuewhen it comes to managing financialrisk. To effectively plan for and protectagainst certain undesired outcomes,acknowledge that even having years ofcommodity market experience does notmean that one can successfully outguessthe markets. Admit that you don’t knowwhat you can’t know, and find a way tohedge against negative circumstancesthat might arise from changing weather,unforeseen factors affecting demand forinputs, changes in legislation and subsi-dies, and so on.

No. 3: Acknowledge the unpre-dictable. Similarly, avoid saying thingssuch as: “In my experience, whenever Xevent occurs in the marketplace, the


result is always Y.” The word “always”can get even the best risk managers intobad positions. When one starts thinkingin terms of absolute reactions, he or sheblocks out the potential to protectagainst perhaps uncommon butunavoidable adverse reactions. Be pre-pared to react to a surprise that changesthe market’s dynamics. No plant willalways be perfectly positioned for everyunpredictable event, but any plant canbe prepared to quickly acknowledge andanalyze changing circumstances to judge

whether they require a change in theplant’s hedging plan.

No. 4: Know the role of the riskmanagers. Define the roles andresponsibilities of the decision makersin a plant’s risk management implemen-tation. Self-doubt about authority toenter positions leads to reluctance,which leads to missed opportunities. It’sgood to have oversight, as no one per-son should have complete authority andresponsibility for a plant’s risk manage-ment strategy and execution, but deci-

sion makers need to have well-definedparameters within which they can workwell and avoid second-guessing. Thosedefined parameters can include price,time, volume or some combination ofthe three.

No. 5: Decide to act, even if itmeans doing nothing. Making nodecision at all is the same as passivelydeciding to do nothing. In some situa-tions, doing nothing is the best courseof action, but doing nothing shouldnever be the result of failing to make an

RISK

Often an individual outside of the plant has a clearer picture of what needs to be done and can make a more rational decision.

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active decision. Sometimes, a market-changing event will occur that leavesplant managers uncertain about whatthe impact will be from a price stand-point. A passive approach would be towait and see how the market respondsbefore discussing the change in the mar-ket with fellow decision makers withinthe organization.

A more responsible approachwould be to raise the concern with thosewho should be involved in making deci-sions as soon as the market-changingevent is discovered. If the decision isthen made to do nothing, at least anopen dialogue and discussion wereencouraged. You won’t always make theright decision, but successful companiesdo not generally succeed on passiveapproaches.

No. 6: Get an opinion from anoutsider. Plant personnel have a vestedinterest in the success of the plant,which is generally a good thing.However, when it comes to risk man-agement, that vested interest can often

get in the way of making good deci-sions. Often an individual outside of theplant has a clearer picture of what needsto be done and can make a more ration-al decision. This also helps to avoid thementality of “looking out your window”to make a decision. When you do thisfor yourself, all you see is what is right infront of you, and the bigger picture isoften overlooked.

ConclusionManaging commodity risk in the

ethanol industry can be incredibly chal-lenging. The two primary commodi-ties—corn and ethanol—have histori-cally had low correlation to one another.This increases the need for a risk man-agement structure that is fluid and ableto quickly adjust to the changing marketdynamics.

In managing the commodity pricerisk that is inherent in the ethanol indus-try, first acknowledge the unpredictablenature of commodity prices and thatyou will not be able to outguess the mar-

kets all of the time. Do not let personalties to the business cloud the view ofthe issues driving the market.

One of the most important keys incommodity risk management is for thedecision makers involved to clearlyknow their roles and responsibilities.Many times, this is where an effectiverisk management program will breakdown. When the time comes to makedecisions and execute, be familiar withthe tools available to make quick andefficient decisions. The above six traitsof successful risk management forethanol plants can increase the likeli-hood of achieving goals in this difficultenvironment. EP

Tom Wapp is the commodity price risk manag-

er at United Bio Energy, a company that pro-

vides risk management consulting and market

advisory services for ethanol producers. Reach

him at [email protected] or (316)

616-3558.

RISK

[email protected]

www.bbiinternational.com





n recent years, lawmakers in theUnited States and the EuropeanUnion have embraced biofuels as a

key element of their respective strategies tocombat climate change and promote energyindependence. However, just as these twomajor markets are beginning to agree ontechnical standards for biofuels, as shown inthe white paper on “InternationallyCompatible Biofuel Standards” that theUnited States and EU lauded at the recentEU-U.S. Summit of 2008, controversy isemerging in both markets on the toughquestion of how to show that biofuels rep-resent life-cycle greenhouse-gas emissionssavings as compared to traditional fossilfuels. The issue is sensitive because thegreenhouse-gas emissions savings of differ-ent biofuels vary substantially.

Life-cycle greenhouse-gas emissionsanalyses for renewable fuels seek to quanti-fy the greenhouse-gas emissions created bythe manufacture of the fuel, including itsinputs, through transportation to the con-sumer, use and disposal. In the UnitedStates, under the 2007 Energy

Independence and Security Act, biofuelsonly qualify for the new renewable fuelsstandard (RFS) if all carbon emissions asso-ciated with their production and use resultin emissions savings of at least 20 percent.In the EU, the Proposed Directive on thePromotion of Energy from RenewableSources provides that biofuels must repre-sent emissions savings of at least 35 percentin order to be taken into account in theEU’s renewable energy targets. These emis-sions savings thresholds have becomemired in controversy. Technical challengesin measuring life-cycle emissions savings,combined with political uncertainty in bothjurisdictions, threaten to stall implementa-tion of these thresholds in both markets.The controversy also may threaten interna-tional trade and investment flows in biofu-els.

U.S. Implementation ChallengesUnder the 2007 Energy Independence

and Security Act, renewable fuels must meetlife-cycle greenhouse-gas emissions reduc-tion targets in order to qualify for the RFS.

Any renewable fuel produced in a facilityunder construction as of December 2007must meet a threshold 20 percent reductionfrom a 2005 baseline, which is generated bymeasuring the 2005 life-cycle greenhouse-gas emissions of traditional fuels. Beginningin 2009, the subcategories of renewable fuel(cellulosic biofuel, advanced biofuel andbiodiesel) created by the act must meet life-cycle greenhouse-gas emissions reductionsof between 50 percent and 60 percent fromthe 2005 baseline before consideration forthe RFS.

Compliance with these thresholds can-not be determined, however, without a res-olution of just how to measure life-cyclegreenhouse-gas emissions. The act obligatesthe U.S. EPA to complete a rulemaking byDecember 2008, which would establish theappropriate model and inputs for estima-tion of life-cycle greenhouse-gas emissionsand finalize emissions reduction targets.The controversy surrounding how best tomeasure life-cycle greenhouse-gas emis-sions, coupled with the shifting politicallandscape, make it unlikely that consensus

POLICY

I

Measuring the TotalCarbon Footprint ofBiofuels Through Life-Cycle AnalysisBy Kenneth J. Markowitz, Bernd G. Janzen and Emily C. Schilling


POLICY

will be reached by the December deadline.The sheer complexity of the analysis, including disagreements

as to the appropriate methodology for measuring greenhouse-gasemissions, will make EPA’s rulemaking a difficult endeavor. Indeed,the EPA decided against using a life-cycle greenhouse-gas emissionsanalysis in 2007 because of the complexities and uncertainties inher-ent in such an analysis. In its rulemaking establishing the 2005 RFS,the EPA determined that “the current state of scientific inquiry sur-rounding life-cycle analyses is not sufficiently robust to warrant itsuse.” The science has not developed sufficiently over the past year toallow for consensus on this issue, and any rulemaking on the issuanceof uniform methodology is likely to be controversial.

In order to undertake a comprehensive rulemaking on a contro-versial topic, the EPA will need time to consider the science and pol-icy objectives of the RFS, and the agency has limited time remainingthis year to conduct a thorough analysis. The EPA indicated earlierthis year that it will not issue a proposal for comment until late sum-mer, which would give the agency less than four months to considerlengthy and complex comments and publish a final rule—an unlike-ly feat. The impending change in presidential administrations is anadditional complicating factor. The Bush administration’s self-imposed deadline for issuing proposed regulations passed on June 1and final regulations will not be published until later than Nov. 1.Although there may be some flexibility in these deadlines, it is unlike-ly that a significant final rulemaking such as this one will be publishedin the final days of the Bush administration. Thus, a new administra-tion will have to address the issue, further delaying publication of afinal rule and creating additional uncertainty for the biofuels industry

Markowitz

Janzen

Schilling


as the 2009 requirements for the RFSapproach.

EU Implementation ChallengesThe biofuels market in the EU reflects

similar uncertainties. The comparable legis-lation in the EU is the Proposed Directiveon the Promotion of Energy fromRenewable Sources, introduced in Januaryand currently the subject of heated debate.The Proposed Directive provides, at Article15.2, that biofuels must represent green-house-gas emissions savings of at least 35percent in order to be counted toward theEU’s renewable energy targets. Article 17specifies a variety of tests for determiningwhether a given biofuel meets this savingsthreshold. First, for most biofuels “produc-tion pathways” used in the EU, the

Proposed Directive specifies deemed“default” emissions savings percentages.For example, the deemed emissions savingspercentage for rapeseed biodiesel, one ofthe principal biofuels produced in Europe,is 36 percent, just above the required thresh-old. In the case of palm oil biodiesel pro-duced outside the EU, the ProposedDirective specifies a deemed emissions sav-ings percentage of 16 percent, well belowthe required 35 percent threshold.

For biofuels for which no deemedemissions savings percentage is provided,the Proposed Directive provides a compli-cated formula for calculating emissions sav-ings. In a nutshell, the formula attempts tocapture, for each distinct biofuel productionpathway, emissions resulting from eightprocesses along the field-to-tailpipe path-way. These include emissions from cultiva-tion and processing of the raw material, andemissions from the transport, distributionand use of the fuel. The formula then com-pares the total emissions to a fossil fuelcomparator. The comparator must be basedon fossil fuel data as gathered by the EU, orif those data are not available, a specifiedvalue of 83.8 grams of carbon dioxideequivalent per megajoule (gCO2eq/MJ).

However, it remains far from clear thatthe proposed 35 percent greenhouse-gasemissions savings threshold, or the method-ology proposed for calculating emissionssavings, will become law. The draft is cur-

rently under review as part of the EU’s“Co-Decision” procedure, in which boththe EU Parliament and Council may pro-pose changes. The Parliament has alreadyproposed a major shift in direction for EUbiofuels policy, urging more analysis of theimpact of biofuels incentives on food secu-rity and environmental sustainability indeveloping countries where biofuels areproduced. Also, industry groups havesharply criticized the 35 percent emissionssavings threshold. In a recent position paperon the Proposed Directive, the EuropeanBiodiesel Board raised multiple concernswith the 35 percent threshold, arguing,among other things, that the currentmethodology for calculating greenhouse-gas emissions savings is overly restrictiveand could exclude biofuels productionpathways that will be critical in reaching theEU’s overall greenhouse gas reductionsgoals.

Another European biofuels industrygroup, the European Bioethanol FuelAssociation, has also raised multiple criti-cisms of the Proposed Directive. One isthat the proposed comparator used to cal-culate compliance with the 35 percent emis-sions savings threshold (83.8 gCO2eq/MJ)is based on light conventional crude oil,rather than more polluting oils also widelyused in fossil fuel production. Accordingly,the comparator should be adjusted upwardto properly account for the use in fossil

POLICY

In light of the controversy surrounding the 35 percentgreenhouse-gas emissions savings threshold, the ProposedDirective in its current formshould be seen as the openingsalvo in a debate that will takemany months to resolve, andmay well result in final legislation in a substantially different form.


fuels of oil other than light conventionalcrude.

In light of the controversy surround-ing the 35 percent greenhouse-gas emis-sions savings threshold, the ProposedDirective in its current form should be seenas the opening salvo in a debate that willtake many months to resolve, and may wellresult in final legislation in a substantiallydifferent form.

Prospects for Transatlantic Friction?

The United States and the EU havemade considerable progress in developingand harmonizing biofuels standards. Thisongoing work is intended to—andshould—facilitate increased biofuels invest-ment and trade. However, divergentapproaches to life-cycle emissions analysisin the United States and the EU may drive anew wedge into the economic relationshipbetween these two major biofuels markets.Biofuels market uncertainty is likely to per-sist until the United States and EU can set-tle on methodologies for measuring biofu-els life-cycle emissions. EP

Kenneth J. Markowitz is senior counsel, Bernd

G. Janzen is counsel and Emily C. Schilling is

an associate in the Washington, D.C., office of

law firm Akin Gump Strauss Hauer & Feld LLP.

POLICY

Setting the Threshold for Future Fuels

The United States and EU continue to implement greenhouse-gas

emissions requirements on biofuels. The U.S. 2007 Energy Independence

and Security Act set life-cycle greenhouse-gas emissions requirements on

biofuels based on 2005 baseline standards. The EU is considering a simi-

lar directive that would require biofuels to have a 35 percent greenhouse-

gas emissions savings in order to be viable for EU’s renewable energy tar-

gets. The Proposed Directive on the Promotion of Energy from Renewable

Sources is under debate.

The U.S. act is based on the following definitions:

Baseline life-cycle greenhouse-gas emissions: The average life-

cycle greenhouse-gas emissions for diesel fuel sold or distributed as trans-

portation fuel in 2005.

Life-cycle greenhouse-gas emissions: The aggregate quantity of

greenhouse-gas emissions (including direct emissions and significant indi-

rect emissions such as those from land use changes) related to the full fuel

life cycle. This life cycle takes into consideration all stages of fuel and feed-

stock production and distribution, from feedstock generation or extraction,

through the distribution and delivery and use of the finished fuel, to the ulti-

mate consumer. Mass values for all greenhouse gases will be adjusted to

account for their relative global warming potential.

More information on the U.S. act and EU’s directive is available here:

http://ec.europa.eu/energy/climate_actions/doc/2008_res_directive_en.pdf

and here: http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.00006.





ne of the top mediators in thecountry used to start his media-tions by saying, “If I do my job,

everyone will leave here equally unhappy.”While this always drew a laugh, there was atruth at the heart of the joke: the secret tosurviving difficult situations is often toadjust expectations from what you wouldlike to what you can actually live with.Companies in the ethanol industry shouldbe pondering this truism right now.

It’s no secret these are trying timesfrom the industryboom that began in2006 with PresidentGeorge W. Bush and others toutingAmerican-producedethanol as a way toindependence fromforeign oil—a plenti-ful, renewable fuel that

could drive us well into the 21st century.Fast forward two years, and things have

quickly changed for those building and sup-plying new plants. Companies whose bal-

ance sheets depend on the success of newethanol plants are facing a significant—albeit expected—slowdown in constructionprojects.

However, all is clearly not lost. Ethanolproduction will not stop, and most compa-nies have found ways to continue profitablyrunning traditional corn-fed ethanol plants.Even so, many producers feel the future isin cellulosic-based feedstocks.

Fortunately, many owners and devel-opers who answered the call to makeethanol the fuel of the future had the fore-sight to purchase larger tracts of land thanwere absolutely necessary for their corn-fedplants. Thus, in the long run, many of thecompanies currently facing economic diffi-culties may be able to retrofit the front endof their plants to allow for commercial-scale cellulosic or sugar-based ethanol pro-duction. Meanwhile, everyone who hasbeen involved in the ethanol plant develop-ment industry for the past few years needsto figure out how to stay strong until thatbuild-out period arrives.

Lessons from the Power Industry

Those caught up in the current diffi-culties can take comfort from the experi-ence of plant owners, contractors, engineersand suppliers in the power plant construc-tion industry in the late 1990s and early2000s. Remember when Vice PresidentDick Cheney said in 2001 that we’d need anew power plant to come on line everyweek for the next 20 years to meet vastlyincreasing power demands?

A lot of people had the same view,resulting in an unprecedented constructionboom, which was followed by increases innatural gas prices, problems with distribu-tion and storage of gas and power, and rev-elations that Enron Corp. and others hadmanipulated supply to create the illusionthat demand vastly exceeded supply. Plantswere mothballed in mid-construction, com-pleted plants sat rusting, and the scramblewas on just to stay alive.

The good news is that many of theseplayers in the gas-turbine power plantindustry survived and are now doing quite

CONSTRUCTION

O

Applying Lessons Learnedfrom Previous ConstructionSlowdownsBy Colin Reid

Reid


CONSTRUCTION

well. How was it done? The answers are asvaried as the companies involved in theethanol industry, but there are some com-mon themes.

Owners’ Concerns, Cash Crunches

For owners who have cash coming infrom other sources, the ethanol crunch may

be creating temporary cash flow problemsthat can be dealt with by negotiating extend-ed payment terms with creditors, includingcontractors, with appropriate security. Thistechnique was used successfully during thepower bust by a number of power plantowners that had lucrative contracts, deals orventures, but were in a temporary crunchdue to the cost of developing new power

plants that were producing little or no rev-enue.

Almost all ethanol plant constructioncontracts contain terms allowing the ownerto suspend work or terminate the contractfor convenience. Proper use of these claus-es may allow the owner to stop incurringcosts that it does not currently have themeans to pay. However, these clausesshould be used with caution, since they willusually result in higher project completioncosts.

Ability to Complete PlantsIf a project is incomplete and there is

concern about the contractor’s ability tocomplete the work, there may be severalavenues open for consideration. Of course,if the contractor posted bonds, letters ofcredit or other security, look to those meansto ensure performance. A word of cautionin dealing with bonds—strictly follow allrequirements and procedures stated in thebond. Failure to follow the bond to the let-ter can result in the loss of all rights underit.

Even if there is no security, the law ofmany states permits a “request for adequateassurances” even if no such right is stated inthe contract with the contractor. If the con-tractor does not respond with reasonableassurances of its ability to complete the


Project ManagPlant Engineers R&D Scientistsngineers Lab Tech

Safety Managers Environmental SpecialistsMaintenance Managers Maintenance Personn

QC Man

ControllersShift SupervisorsSalesOperator

Staffing the Biofuels Industry

(866) 746-8385

[email protected]

www.biofue lsrecru i t ing.com

Biofuels RecruitingBBI International

work, the owner may have a right to declarethe contractor in default. This doctrine isdiscussed in more detail below.

For some owners and developers,bankruptcy is inevitable—the economicsjust don’t work. In extreme cases, bankrupt-cy may take the form of liquidation, or itmay take the form of a Chapter 11 reorga-nization that allows the debtor some breath-ing room from claims by creditors, and may

allow the debtor to reduce or shed somebad debts while retaining profitable opera-tions and relationships.

Contractor, Supplier Concerns

If a project is incomplete, many con-tracts (such as the American Institute ofArchitects or AIA forms) give contractorsthe right to request that the owner demon-

strate adequate evidence of the owner’scontinuing ability to pay for construction.This right exists in many states even if itisn’t stated in the contract. Called a requestfor adequate assurance, it was created forsituations such as those affecting some inthe ethanol market.

If a contractor has reason to believethat the owner won’t be able to pay for thework when payment is due, perhaps a large

CONSTRUCTION

0

1

2

3

4

5

6

7

8

8/06

9/06

10/0

6

11/0

6

12/0

6

1/07

2/07

3/07

4/07

5/07

6/07

7/07

8/07

9/07

10/0

7

11/0

7

12/0

7

1/08

2/08

3/08

3/08

4/08

5/08

6/08

Number of Ethanol Plants Starting Construction

Dat

e

Num

ber o

f pla

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per m

onth

SOURCE: BBI INTERNATIONAL INC.


subcontract includes an enforceable pay ifpaid clause, subcontractors should be able tocollect payment for their work from theprime contractor even if the owner is insol-vent. Also, there may be a payment bond,which allows recovery if neither the ownernor the contractor can pay.

The Best Tools: Communication, Realistic Expectations

All of the tools highlighted above wereused by victims of the power bust to stayafloat and even remain profitable. Manymore tools are available, but probably noneis better than simple communication.Communication does not solve all prob-lems. Sometimes there is simply no moneyand nothing will make it appear. However, ifthe parties become secretive and adversarialwhen trouble hits, there is no chance the

parties will be able to come up with creativesolutions that everyone—owner, lender,engineer, supplier and subcontractor—canlive with.

Having represented and negotiatedwith numerous companies during both thegas-turbine bust and the current ethanolplant construction situation, it’s apparentthat solutions can best be reached on manyprojects if everyone is open and honestabout the problems, and everyone is com-municating and willing to compromise. Youmay not walk away happy, but at least youcan walk away with your business intact. EP

Colin Reid is a member of the Construction

Industry Practice Group at Sherman & Howard

LLC, a Denver-based national law firm. Reach

him at [email protected] or (303)

299-8230.

CONSTRUCTION

retainage payment at the end of the job, thecontractor doesn’t have to keep working andrunning up costs just because the owner has-n’t yet breached the contract by failing to pay.Instead, a letter can be sent stating the rea-sons for concern and requesting reasonableassurances of the owner’s continuing abilityto pay. If the owner fails to provide such evi-dence within a reasonable time period, thecontractor or supplier can then treat that asa breach and stop work. This allows them toavoid incurring additional costs that maynever be reimbursed. This approach enablescost savings, but should be exercised withcaution and advice from a knowledgeableattorney.

If the owner is already late in makingpayments, the contractor may have a right tosuspend work to avoid additional costs. Thecontractor may also have the right to notifythe project lender of non-payment andrequire the lender to set aside loan funds forunpaid invoices. Again, caution is requiredand counsel should be consulted before act-ing.

Payment for Completed WorkA mechanic’s lien rights exist in all

states. It’s important to determine whetherthe lien trumps the lender’s mortgage. Ifnot, the lender’s first position mortgage mayrender the lien worthless.

In some cases, it may not be clear whohas first position, which opens the door tonegotiations. One particular value of themechanic’s lien is that it often creates covet-ed secured creditor status if the owner goesbankrupt.

Also, if the project has been finishedwith undisbursed construction loan funds,contractors, subcontractors and suppliersmay have rights to a portion of these funds.Access to these funds may exist even if theowner files bankruptcy because such fundsoften are not treated as property of thebankruptcy estate.

Subcontractors and suppliers, who arebelow the design/build contractor or primecontractor in the contracting chain, mayhave other sources of recovery. Unless the

EVENTS CALENDAR

Ethanol & BiodieselManagement UniversitySeptember 8-9, 2008

Renaissance Houston Hotel

Houston, Texas

This two-day training course focuses on how to

purchase, handle, hedge and manage renewable

fuels. Expert instructors will discuss which fuel

technologies present future opportunities. Agenda

topics will include an overview of supply, demand

and policy factors; imports and exports; feed-

stocks; distillers grains; transportation and storage;

blending; the federal renewable fuels standard and

credit trading systems; and federal tax law.

(866) 620-5940

www.opisnet.com/ethbiomgmt

Biofuels Markets AmericasSeptember 9-10, 2008

Hotel Emperador

Buenos Aires, Argentina

Officially supported by the Argentine Biofuels and

Hydrogen Association, last year’s inaugural event

focused on the biodiesel market. Due to popular

request, this year's event has been expanded to

include BioPower Americas, a concurrent event.

The joint general session will include discussion of

the “bio revolution,” the global industry, climate

change, energy supply and demand, finance and

investment, sustainability, and feedstocks. The sec-

ond day of the event will break the agenda into the

two groups: biofuels and biopower.

+44 207 801 6333

www.greenpowerconferences.com

European Forum for Industrial Biotechnology September 15-17, 2008

Hotel Bloom

Brussels, Belgium

This inaugural event aims to bring together a sen-

ior and international group of biotechnology pro-

ducers, chemicals and plastics suppliers, biomass

and biorefinery representatives, end users from a

wide variety of industries, and academia. Topics of

discussion will include biofuels, biorefineries,

biobased products, Europe’s knowledge-based

bioeconomy, Asia’s perspective, chemicals, financ-

ing and commercialization, among many others.

+44 (0) 1372 802101

www.efib2008.com

Next GenerationBiofuel Markets

October 6-7, 2008Hotel Okura

Amsterdam, Netherlands

This fourth annual event will bring together key

players to address the latest developments in cre-

ating the cost-competitive, industrial-scale produc-

tion of next-generation biofuels technologies.

Agenda topics will include commercialization,

financing and investing, global developments, cel-

lulosic ethanol and other biomass-based fuel, and

feedstocks such as switchgrass and sorghum.

+44 207 801 6333


International Distillers GrainsConference & Trade Show

October 19-21, 2008Indianapolis Marriott Downtown

Indianapolis, Indiana

This event will seek to educate and empower the

end users of distillers grains, and enhance cus-

tomer outreach activities worldwide. The agenda

includes topics such as distillers grains supply and

demand; exports, particularly in Asia; fractionation;

and global feeding trends, especially in poultry,

swine and cattle.

(719) 539-0300

www.distillersgrainsconference.com

World Biofuels SymposiumOctober 19-21, 2008

Tsinghua University

Beijing, China

This fourth annual event, organized by BBI

International Inc., will explore the world energy

issues that China currently faces, specifically in

regard to biofuels. Agenda topics will include biofu-

els policy in China compared with Brazil, the

United States, Europe and Singapore; Chinese

agriculture and food supply; life cycle analyses;

blending; feedstocks; cellulosic ethanol; enzymes;

coproducts; and plant optimization.

(719) 539-0300

www.worldbiofuelssymposium.com


Biofuels Markets East AfricaSeptember 16-18, 2008

Kilimanjaro Hotel Kempinski

Dar Es Salaam, Tanzania

This inaugural event will particularly focus on

Tanzania, Uganda and Kenya. The case-study-led

agenda will include presentations and panels that

review the current status of the biofuels market in

this region, and address the expanding opportuni-

ties for the production of feedstocks and biofuels for

use in Africa and for export. Agenda topics will

include financing; sustainability; feedstocks; biofuels

production; and blending, marketing, distribution

and transportation.

+44 207 801 6333


Texas Biofuels Conference & Expo

September 17-18, 2008Hilton Austin Airport

Austin, Texas

This third annual event will take an in-depth look at

the latest regulatory, agricultural and technical

developments impacting the renewable fuels indus-

try in Texas. Special attention will be given to the

Energy Independence & Security Act of 2007 and

the impact it will have on the future of renewable

fuels in Texas.

(512) 358-1000

www.biofuelevents.com

The Alcohol SchoolSeptember 28-October 3, 2008

The Intercontinental Hotel

Montreal, Quebec

The weeklong program is designed for lab, plant

and management personnel, and is organized

around lectures, laboratory demonstrations, semi-

nars and plant visits. The program will cover the

process of ethanol production from milling and mash

preparation through fermentation and distillation.

Enzyme usage, yeast biology, and bacterial contam-

ination and control will also be discussed, along with

other issues currently affecting the industry.

(800) 583-6484

www.ethanoltech.com

Biofuels Markets AfricaDecember 1-3, 2008

Cape Town, South Africa

The approval of the Biofuel Industrial Strategy for

South Africa in December provides fresh impetus

for the country’s biofuels market, along with a foun-

dation and road map to push the market forward.

The initial 2 percent biofuels penetration scenario

totaling 105 MMgy will create 25,000 jobs, accord-

ing to the strategy. This third annual event will bring

together executives from across Africa to discuss

strategies that will enhance the development of a

sustainable, regional biofuels industry.

+44 207 801 6333


Canadian RenewableFuels Summit

December 1-3, 2008Hilton Hotel Lac Leamy

Hull, Quebec

Themed “Growing Beyond Oil,” the Canadian

Renewable Fuels Association’s fifth annual event

will continue to discuss the progress, challenges

and opportunities facing the Canadian biofuels

market. It will focus on policy and marketing, and

will be attended by a number of industry represen-

tatives from all levels of the ethanol and biodiesel

industries.

(519) 576-4500

www.canadianrenewablefuelssummit.com

National Ethanol ConferenceFebruary 23-25, 2009

San Antonio Convention Center

San Antonio, Texas

This event will cover the industry’s impact on the

U.S. economy, the environment, food prices and

the international market. A record of nearly 2,500

people attended in 2008. An agenda will be avail-

able as the event approaches.

(202) 289-3835

www.ethanolrfa.org



EPM MARKETPLACE

Ag Products & Services

Grain Origination Services

Agnetic, LLC

317-696-2824 blog.agnetic.com

Hybrid Corn

Pioneer Hi-Bred International, Inc.

800-247-6803 www.pioneer.com

Associations/Organizations

Trade

API Credit Exchange

202-682-8192 www.api.org/ace

Ethanol Promotion & Information Council (EPIC)

402-932-0567 www.drivingethanol.org

Chemicals

PhibroChem

800-223-0434 www.lactrol.com

Anti-Microbial

North American Bioproducts Corporation

866-342-7026 www.na-bio.com

PhibroChem

800-223-0434 www.lactrol.com

CIP

Univar USA Inc.

402-733-3266 www.univarusa.com

Desiccant

Gordon Technologies

570-279-8086 www.gtsieve.com

Water Treatment

Fremont Industries Inc.

952-445-4121 www.fremontind.com

Yeast

Ferm Solutions

859-402-8707 www.ferm-solutions.com

Fermentis-Division of SI Lesaffre

800-558-7279 www.fermentis.com

North American Bioproducts Corporation

866-342-7026 www.na-bio.com

Cleaning

Dryer Systems

Hydro-Klean, Inc.

515-283-0500 www.hydro-klean.com

Inland Waters

313-841-5800 www.inlandwaters.com


800-369-5500 www.senecacompanies.com

Ductwork

Hydro-Klean, Inc.


Inland Waters




Emergency Spill Response

Hydro-Klean, Inc.


Inland Waters




Fans

Hydro-Klean, Inc.


Inland Waters




Filter Media

Hydro-Klean, Inc.




Heat Exchanger

Hydro-Klean, Inc.


Inland Waters




Summit Industrial Products

800-749-5823 www.klsummit.com

Hydro-Blasting

Hydro-Klean, Inc.


Inland Waters


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dirt, corrosion & rust.

• NSF Registered & Biodegradable• Non-Hazardous • Non-Corrosive

• Changes color when spent

800.749.5823P.O. Box 131359Tyler, TX 75713

www.klsummit.com

www.sublimedescaler.com


EPM MARKETPLACE

Plate-Frame

Hydro-Klean, Inc.




Railcars

Hydro-Klean, Inc.


Inland Waters




Smoke Stack

Hydro-Klean, Inc.


Inland Waters




Tank Cleaning Equipment

Spraying Systems Co.

630-665-5000 www.spray.com

Tank Cleaning Services

Hydro-Klean, Inc.


Inland Waters


Professional Environmental Cleaning Services

402-212-0949 www.professionalECS.com



Construction

Fabrication

Macomber Welding & Fabricating, Inc.

616-698-0819 www.macomberwelding.com

VAL-FAB Inc.

877-482-5322 www.valfab.com

W. Soule & Company

1-877-976-8531 www.wsoule.com

Grain Storage

Coverall Building Systems

800-268-3768 www.coverall.net

Insulation

Mavo Systems

763-788-7713 www.mavo.com

Mayes Coatings, Inc.

866-93MAYES www.mayescoatings.com

Miller Insulation Co, Inc.

701-258-4323 www.millerinsulation.com

Mechanical

Mid-States Mechanical Services, Inc.

800-950-0279 www.mid-statesmechanical.com

W. Soule & Company

1-877-976-8531 www.wsoule.com

Plant Construction

Agra Industries, Inc.

715-536-9584 www.agraind.com

Agri-Systems

406-245-6231 www.agrisystems.net

CYC Construction

402-333-1652 www.cycconstruction.com

JIC JOULÉ Industrial Contractors

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

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

Toll Free: (800) [email protected]

JIC

Send resume to [email protected] or call toll free 1-877-MORTENSON

www.mortenson.comMortenson is an EOE.

Mortenson, a leader in ‘green’ renewable energy construction, seeks individuals that can thrive in a culture built upon the pillars of ingenuity, expertise, and exceptional people.

ENGINEERING, SUPERINTENDENT,

& MANAGEMENT POSITIONS AVAILABLE NATIONALLY. We invite you to BUILD your career at Mortenson. Contact us today!

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Your Career Choice.


EPM MARKETPLACE

Reimer Welding Inc.

218-773-0886 www.reimerwelding.com

Wanzek Construction,Inc.

701-282-6171 wanzek.com

Railroad Tracks

R & R Contracting, Inc.

800-872-5975 www.rrcontracting.net

Railworks

913-888-4091 www.railworks.com

Volkmann Railroad Builders, Inc.

262-252-3377 www.volkmannrr.com

Tanks

DCI, Inc.

320-252-8200 www.dciinc.com

Eagle Tanks, Inc.

888-678-0698 www.eagletanks.com

WINBCO Tank Company

641-683-1855 www.winbco.com

Consulting

Business Plans

ICM, Inc.

316-796-0900 www.icminc.com

Environmental

Air Resource Specialists,Inc.

970-484-7941 www.air-resource.com

ICM, Inc.


Inland Waters


Seneca Companies


TKDA

651-292-4602 www.tkda.com

Feasibility Studies

Harris Group Inc.

206-494-9422 www.harrisgroup.com

Groundwater Services

Leggette, Brashears & Graham, Inc.

651-490-1405 www.lbgweb.com

Personnel Recruiting

SearchPath of Chicago

815-261-4403 www.searchpath.com/chicago

Plant Optimization

Granatus Consulting, Inc.

218-773-0005 www.granatusinc.com

Harris Group Inc.


Terratec Biofuels of Solutia

800-742-1476 www.TerratecBiofuels.com

Project Development

Ethanol Productions

813-968-6867 [email protected]

Harris Group Inc.


Public Relations

Lanser Public Affairs, LLC

262-797-7876 www.lanserpublicaffairs.com

Quality Assurance

Eurofins Scientific, Inc.

551-580-9140 www.eurofinsus.com

Regulatory

Air Resource Specialists.Inc.

970-484-7941 www.air-resource.com

Risk Management

National Fuel Marketing

303-996-6781 www.NationalFuelMarketing.com

Education

Iowa BioDevelopment

641-969-4167 www.iabiodevelopment.com

Iowa Biofuels Training International

641-969-4167 www.biofuelstraining.org

Employment

Recruiting

Hobbs & Towne

610-783-4600x108 www.hobbstowne.com

SearchPath of Chicago

815-261-4403 www.searchpath.com/chicago

The Richmond Group USA - BioEnergy Search Division

804-285-2071 www.trgbioenergy.com

Engineering

Civil

Antioch International, Inc.

402-289-2217 www.antioch-intl.com

TKDA


Grading, sampling, mycotoxins, proximates, residues, GMOs.QA / QC Consulting: HACCP, GMPs, SOPs, NIR calibrationCo-products: Quality assurance testing; Lot certification; Export assistance

[email protected]

Optimize the Value of Your Co-Products


EPM MARKETPLACE

Control Systems

Bachelor Controls

785-284-3482 www.bachelorcontrols.com

Control System Integrators, Inc.

319-377-6538 x19 www.csystemi.com

Design/Build



Agri-Systems


Delta-T Corporation

757-941-0188 www.deltatcorp.com

ECE Design

312-235-6960 www.ecedesign.com

Ethanol Productions


GS CleanTech Corp.

678-566-3588 www.gs-cleantech.com

ICM, Inc.


Wanzek Construction, Inc.

701-282-6171 wanzek.com

Process Design

Agri-Systems


ChemSim

781-248-5057 www.chemsim.com

Process Engineering Associates, LLC

865-220-8722 www.processengr.com

Vogelbusch USA, Inc.

713-461-7374 www.vogelbusch.com

Equipment & Services

Air Pollution/Odor Control

Ceco Abatement Systems, Inc.

630-493-0624 www.cecoenviro.com/Abatement

ICM, Inc.


Analytical Instruments

Anton Paar

+1-804-550-1051 www.anton-paar.com

Blowers & Fans

Robinson Industries, Inc.

724-452-6121 www.robinsonfans.com

Boiler Systems

Factory Sales and Engineering, Inc.

985-867-9150 www.fsela.com

Rentech Boiler Systems, Inc.

325-794-5701 www.rentechboilers.com

Catwalks

Lean Technologies LLC

701-352-9620 www.leantechnologiesllc.com

Centrifuge Repair

Nosnhoj Services Inc.

317-887-6436 www.nosnhojinc.com

Centrifuges

Westfalia Separator,Inc.

201-784-4322 www.wsus.com

Combustion Equipment

Eclipse.Inc.

815-637-7213 www.eclipsenet.com

John Zink Company LLC

800-421-9242 www.johnzink.com

Compressors

FlaktWoods

716-845-0900 www.flaktwoods.com

Computer Software

dbc SMARTsoftware, Inc.

770-427-7633 www.dbcsmartsoftware.com

Encore Business Solutions

204-989-4330 www.encorebusiness.com

John Deere Agri Services

770-238-5100 www.johndeereagriservices.com

Summit Software, Inc.

800-433-5724 x 181 www.summit-soft.com

Control Systems

Automation Alliance

205-271-9743 www.automationalliance.net

Kahler Automation Corp.

507-235-6648 www.kahlerautomation.com

SoftPLC Corporation

512-264-8390 www.softplc.com

Control Systems-Distributed

Control System Integrators, Inc.

319-377-6538 x19 www.csystemi.com

Conveyors–Enclosed

Grisley Components, Inc.

303-756-6474 www.grisley.com

Conveyors–Pneumatic

Blower Engineering

800-388-1339 www.blowerengineering.com

Gusmer Enterprises, Inc.

847-277-9785 www.gusmerenterprises.com


EPM MARKETPLACE

Decanters

Distillation Equipment

SRS Engineering Corporation

800-497-5841 www.srsengineering.com

Dryers-Flash

Barr-Rosin,Inc.

630-659-3980 www.barr-rosin.com

Dryers-Fluid Bed

Aeroglide Corporation

919-851-2000 www.aeroglide.com

Dryers-Other

Davenport Dryer, LLC

309-786-1500 www.davenportdryer.com

Dryers-Ring

Barr-Rosin,Inc


Dryers—Rotary Drum

Aeroglide Corporation

919-851-2000 www.aeroglide.com

Barr-Rosin,Inc.


FEECO International, Inc.

920-468-1000 www.feeco.com

ICM, Inc.


Ronning Engineering Company, Inc.

913-239-8118 www.ronningengineering.com

Emission Monitoring Systems

MonitorTech Corp.

866-682-6771 www.monitortechgrp.com

Emissions Testing & Reduction

Lantec Products, Inc.

617-265-2171 www.lantecp.com

Evaporators

GEA NIRO Inc

410-997-8700 www.niroinc.com

HRS Process Technology, Inc.

623-915-4328 www.hrs-americas.com

Fermentors

WINBCO Tank Company


Filters

Eaton Filtration

800-656-3344 ext 581 [email protected]

Larox

301-543-1200 www.larox.com/cpi

Filtration Equipment

BWF America

800-733-2043 www.bwf-america.com

W.S. Tyler

1-800-321-6188 www.wstyler.com

Fractionation—Corn

Buhler Inc.

763-847-9900 www.buhlergroup.com/us

Cereal Process Technologies

217-779-2595 www.cerealprocess.com

FWS Technologies

204-487-2500 www.fwsgroup.com

Sturtevant Inc.

781-829-6501 www.sturtevantinc.com

Gas Detectors

UE Systems, Inc.

914-592-1220 www.uesystems.com

Gaskets

Allegheny Coupling Company

814-723-8150 www.alleghenycoupling.com

Grain Handling & Storage

Sukup Manufacturing Co.

641-892-4222 www.sukup.com

Heat Exchangers

Custom Metalcraft Inc.

417-862-0707 www.custom-metalcraft.com

Your Solution. Advertise Today.

EPM MARKETPLACE

Reach your customers

Continuous Emissions Monitoring SystemsEasiest installation, operation and maintenance

Meet or exceeds EPA requirementsNOx, O2, CO, SO2 and others

Turnkey systems for under $100,000.00P.O. Box 9271, Columbus, Oh 43209


With all contact information placed in

one convenient location, EthanolProducer Magazine not only contains

top editorial content but also a useful

directory in each publication. Whether a

first-time advertiser wanting to raise

awareness of your business or a

frequent display advertiser looking for

added exposure, EPM Marketplace is

the perfect solution.

EPM MARKETPLACE


EPM MARKETPLACE

Munters - Des Champs Products

540-291-1111 www.deschamps.com

Instrumentation

Instrument Associates

708-597-9880 www.instrumentassociates.com

Process Sensors Corp.

508-473-9901 www.processsensors.com

Shimadzu Scientific Instruments

800-477-1227 www.ssi.shimadzu.com

WIKA Instrument Corporation

888-945-2872, x5127 www.wika.com

Jet Cookers

ProSonix Corporation

800-849-1130, x. 801 www.pro-sonix.com

Laboratory-Equipment

Astoria-Pacific International

800-536-3111 www.astoria-pacific.com

Laboratory-Supplies

Midland Scientific, Inc.

800-642-5263 www.midlandsci.com

Laboratory-Testing Services

Eurofins GeneScan, Inc.

504-297-4330 www.gmotesting.com

Midwest Laboratories

402-334-7770 www.midwestlabs.com

Romer Labs, Inc.

636-583-8600 www.romerlabs.com

SGS North America, Inc.

281-478-8234www.sgs.com/alternativefuels

Trilogy Analytical Laboratory

636-239-1521 www.trilogylab.com

Loading Equipment

Hemco Industries, Inc.

877-347-7106 www.hemcocpm.com

SafeRack

866-761-7225 www.saferack.com

Lubrication Systems

Maintenance Services

Joule’ Industrial Contractors

[email protected] www.jouleinc.com

Maintenance Software

Mapcon Technologies, Inc.

800-922-4336 www.mapcon.com

Mills-Hammer

CBT Wear Parts, Inc.

888-228-3625 www.cbtwearparts.com

Prater-Sterling

630-679-3254 www.prater-sterling.com

CPM/Roskamp Champion

800-366-2563 www.cpmroskamp.com

Millwright

Agri-Systems


Mixers

KINEMATICA, INC.

631-750-6653 www.kinematica-inc.com

Moisture Analyzers

Sartorius Mechatronies-Omnimark

800-835-3211 www.sartorius-omnimark.com

www.wika.com

Contact Hardy Orzikowski for more information and to schedule your free instrument review.888.945.2872 ext. [email protected]

Made in the U.S.A.

Pressure Gauge

Solutions for the Ethanol Industry


EPM MARKETPLACE



EPM MARKETPLACE

Your Ad HERE

Summit Industrial Products

has lubricants and greases for

conveyors, dryers, cooling

tower pumps, gearboxes,

blowers, compressors, motor

bearings and CO2 recovery.

Call today for a distributor

in your area.

800.749.5823P.O. Box 131359Tyler, TX 75713

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EPM MARKETPLACE

Molecular Sieves

Gordon Technologies

570-279-8086 www.gtsieve.com

Vaperma, Inc.

418-839-6989 www.vaperma.com

Zeochem, LLC

502-634-7600 www.zeochem.com

Motors

Trico TCWind, Incorporated

320-693-6200 www.tricotcwind.com

Pipe

American Stainless & Supply

800-845-5511 www.americanstainless.com

ISCO Industries

800-345-4726 www.isco-pipe.com

Robert-James Sales, Inc.

800-666-0088 www.rjsales.com

Pipe-Fittings



St. Louis Pipe & Supply

800-737-7473 www.stlpipesupply.com

Pipe-Flanges



Pressure & Temperature

WIKA Instrument Corporation

888-945-2872, x5127 www.wika.com

Pressure Vessels

WINBCO Tank Company


Process Control

Harris Group Inc.


Pumps

ITT Industries Goulds Pumps

315-568-2811 www.gouldspumps.com

Watson-Marlow Bredel Pumps

800-282-8823 www.watson-marlow.com

Yamada America, Inc.

800-990-7867 www.yamadapump.com

QA Test Products

Phenomenex

310-212-0555x3328 www.phenomenex.com

RTO Media



Resource Recovery

Eco-Tec, Inc.

905-427-0077 www.eco-tec.com

Safety

SimplexGrinnell

800-746-7539 www.simplexgrinnell.com

Seals

Aesseal Inc.

865-531-0192 www.aesseal.com

Utex Industries, Inc.

432-333-4151/800-873-0946 www.utexind.com

Sensors

Electro Sensors

800-328-6170 www.electro-sensors.com

Separation Equipment

Puritan Magnetics, Inc.

248-628-3808 www.puritanmagnetics.com

Separators

Westfalia Separator,Inc.

201-784-4322 www.wsus.com

Steel Suppliers

Chapel Steel


Outokumpu Stainless

847-517-4050 www.outokumpu.com

Sandmeyer Steel Company

215-464-7100 www.sandmeyersteel.com

Storage—DDGS

Laidig Systems, Inc.

574-256-0204 www.laidig.com

Structural Fabrication

Cherokee Steel Fabricators, Inc.

903-759-3844 www.cherokeesteelfabricators.com

Tanks



Brown-Minneapolis Tank

281-252-9809 www.bmt-tank.com

CMC Letco Industries

417-831-1528 www.cmc-letco.com

Federal Equipment Company

800-652-2466 www.fedequip.com

Greenberry Industrial

541-757-8458 www.greenberryinc.com

Paragon Trailer Sales

800-471-8769 www.paragontrailer.com

WINBCO Tank Company


Thermal Energy

American Waste Removal

505-417-9933 www.americanwasteremoval.com

Thermal Oxidizers

ICM, Inc.


[email protected]

PROVENRELIABILITYfor VOC, CO & PM

ABATEMENT

EISENMANN CorporationCrystal Lake, Illinois


EPM MARKETPLACE

Pro-Environmental, Inc.

909-989-3010 www.pro-env.com

Turbines-Gas

Kawasaki Gas Turbines

281-970-3255x18 www.kawasakigasturbines.com

Used Equipment

VOC Scrubbers



Valve Actuators

Rotork Controls,Inc.

585-247-2304 www.rotork.com

Valves

Central States Group

800-318-2747 www.centralstatesgroup.com

Check-All Valve Mfg. Co.

515-224-2301 www.checkall.com

Metso Automation

508-852-0215 www.metsoethanol.com

Wastewater Treatment Services

Biothane Corporation

856-541-3500x501 www.biothane.com

Water Treatment

Aquatech International Corporation

724-746-5300 www.aquatech.com

Siemens Water Technologies

800-525-0658 www.siemens.com/water

Ethanol Production

Existing Producers

Louis Dreyfus Commodities

402-844-2680 LDCommodities.com

Future Producers

Syntec Biofuel, Inc.

604-648-2092 www.syntecbiofuel.com

Finance

Accounting

Christianson & Associates PLLP

320-235-5937 www.christiansoncpa.com

Kennedy and Coe, LLC

800-303-3241 www.kcoe.com

Appraisals

Natwick Associates Appraisal Services

800-279-4757 www.natwick.com

Due Diligence

Harris Group Inc.


Equity Procurement

Greenman Funding


Jordan, Knauff & Company

312-254-5900 www.jordanknauff.com

Insurance

Armor Companies, Inc.


Chubb Insurance

312-454-4250 chubb.com

ERI Solutions, Inc.

316-927-4294 erisolutions.com

Lender Representatives

Greenman Funding


Mergers & Acquisitions

Thomas Group Capital

404-504-6050 www.thomassec.com

Risk Management

First Capitol Risk Management

800-884-8290 www.firstcapitolrm.com

R.J. O’Brien

800-621-0757 www.rjobrien.com

R.J. O’Brien

800-621-0757 www.rjobrien.com

Software-Accounting

Encore Business Solutions

204-989-4330 www.encorebusiness.com

Summit Software, Inc.

800-433-5724 x 181 www.summit-soft.com

Legal Services

Attorneys

BrownWinick Law Firm

515-242-2400 www.biofuellawyers.com

Dorsey & Whitney LLP

612-343-8275 www.dorsey.com

Faegre & Benson, LLP

612-766-6930 www.faegre.com

Stoel Rives LLP

612-373-8800 www.stoel.com/biofuels

Marketing

Distillers Grains

CHS, Inc.

651-355-6271 www.chsinc.com

Gavilon

402-595-5678 www.gavilon.com

Hawkeye Gold, LLC

515-663-6429 www.hawkgold.com


EPM MARKETPLACE

Fuel Ethanol

Atlas Renewable Energy, LLC

800-884-8290 www.atlasenergyllc.com

C&N Ethanol Marketing Corp.

952-854-6675 www.candncompanies.com

Gavilon

402-595-5678 www.gavilon.com

Noble Americas Corporation

626-585-1705 www.thisisnoble.com

Provista Renewable Fuels Marketing

651-355-8519 www.provistafuels.com

Media

Websites

Transportation

Heavy Highway Transport

Landstar Carrier Group

920-487-3877 www.landstar.com

Rail

Ameritrack RailRoad Contractors, Inc.

765-659-2111 www.ameritrackrailroad.com

Blacklands Railroad

903-439-0738 www.blacklandsrailroad.com

Rail Consulting

Antioch International, Inc.

402-289-2217 www.antioch-intl.com

TKDA


Rail Ties

Thompson Industries, Inc.

317-859-8725 www.thompsonindustries.net

Railcar Moving

Heyl & Patterson Inc.

412-788-9810 www.heylpatterson.com

Shuttlewagon

816-767-0300 www.shuttlewagon.com

Railcar Parts

Salco Products, Inc.

630-783-2570 www.salcoproducts.com

Utilities

Natural Gas

Utility

Integrys Energy Services

608-235-2547 www.integrysenergy.com

DOMAIN NAME (WEBSITE ADDRESS) FOR SALE:

ethanol.biz $6500

.biz is for business. If you’re in the ethanol business, you really ought to consider buying and utilizing a website address that is intuitive, generic, and preferably one word only. ethanol.biz

contact: [email protected] or call (310) 926-7472

RAILCAR MOVING

P 412-788-9810 F 412-788-9822 E [email protected]

The CUB™ is an electromechanicalmachine designed to move single

railcars or groups of cars. Some advantages of the CUB™ are:

•Safety of Personnel•One Person Operation•Little Maintenance Requirements•Low Investment/Operating Costs

Ask about our complete line of Railcar Moving Devices

www.heylpatterson.com

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

Contact Mark Rundle [email protected]

or (608) 222-5170.

With all contact information placed in

one convenient location, Ethanol

Producer Magazine not only contains

top editorial content but also a useful

directory in each publication. Whether a

first-time advertiser wanting to raise

awareness of your business or a

frequent display advertiser looking for

added exposure, EPM Marketplace is

the perfect solution.

EPM MARKETPLACE


EPM MARKETPLACE



EPM MARKETPLACE

Your Ad HERE

[email protected]

www.bbiinternational.com

EXPANDING?UPGRADING?

Keep Your Plant Runningwith our In-Stock Stainless PVF

Robert-James Sales—the leading distributor of in-stock stainless pipe, fittings, valves and flanges—got yournew plant up and running when it was built. Now look to us to service all your continuing MRO requirements.Over 80% of all orders are shipped the same day from our nine regional warehouses. We also ship the largersize products up to 54” in diameter demanded by the biofuel processing industry today.

Buffalo, NY 800-666-0088Cleveland, OH 800-777-0820Cincinnati, OH 800-777-2260Chicago, IL 800-777-2008Indianapolis, IN 800-777-0510Minneapolis, MN 800-777-1355South Plainfield, NJ 800-777-1858Raleigh, NC 866-493-8834Tavernier, FL 305-852-1694www.rjsales.com

Free Product CDContact the Robert-James Sales locationnearest you and ask for a freecopy of our comprehensive,up-to-date CD. It outlines our stainless product lineincluding reference charts,graphs and tables to help you calculate what your processing plant needs.

Stocking

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ange of

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Documents

September 2008 Ethanol Producer Magazine