July 2010 Ethanol Producer Magazine

JULY 2010

INSIDE: PLANTS UNDER CONSTRUCTION AND PROPOSED

WWW.ETHANOLPRODUCER.COM

Obama FocusesOn Ethanol Missouri Plant Hosts President on White House to Main Street Tour

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ETHANOL PRODUCER MAGAZINE July 2010 4

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vol. 16 no. 7

48 PRESIDENTIAL TOUR The Thrill of a Presidential Visit President Obama toured and spoke at Poet Biorefi ning-Macon in his White House to Main Street tour.–By Holly Jessen

58 PROJECT DEVELOPMENT—SUGAR/STARCHU.S., Canadian Project Roundup EPM reviews recently completed plants, those still under construction, plus interesting proposed projects.–By Holly Jessen and Luke Geiver

68 PROJECT DEVELOPMENT—CELLULOSIC Cellulosic Snapshot Th e U.S. EPA lowered the cellulosic mandate for the fi rst year while cellulosic ethanol developers press on.–By Anna Austin

76 INTERNATIONALInternational Ethanol Report: 2010 Brazil remains second only to the U.S., but other regions expect ethanol growth, too.–By Luke Geiver and Holly Jessen

82 FINANCEBeating Bankruptcy Conserving cash and continued production are major keys to successfully emerging from Chapter 11.–By Luke Geiver

88 ENGINESA Boost to the System Smaller engines can deliver more torque, tapping into ethanol’s higher octane and cooling characteristics.–By Luke Geiver

94 USEEthanol to Drink Two fuel ethanol producers talk about producing consumable ethanol as well, while a researcher reports progress on a new purifi cation process.–By Holly Jessen

features

contents

Correction:In the View from the Hill column in the June issue, a Purdue University professor was incorrectly identifi ed. It was Wally Tyner who recently recalculated the impact of indirect land use change for corn ethanol to fi nd the impact to be half that of his earlier modeling.

ON THE COVERPresident Obama got a personal tour from Steve Burnett, general manager of Poet Biorefi ning-Macon, Mo. PHOTO BY GREG LATZA

Ethanol Producer Magazine: (USPS No. 023-974) July 2010, Vol. 16, Issue 7. Ethanol Producer Magazine is published monthly. Principal Of-fi ce: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offi ces. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

8 Editor’s Note Projects Advance, Editorial Board Announced By Susanne Retka Schill

9 Advertiser Index

10 Events Calendar

14 The Way I See It Refl ections on the Lessons from the Gulf Oil Spill By Mike Bryan

16 View From the Hill All in the Details By Bob Dinneen

18 Drive What We Really Need For a Choice at the Fueling Pump By Tom Buis

20 eBio Sustainability and Credibility By Rob Vierhoust

22 Taking Stalk The 2009 Corn Crop—A Year to Recognize Quality By Charles R. Hurburgh

24 Business Matters New Health Care Bill Affects Business Owners Immediately By Clinton Baker

26 Business & People

30 Commodities

32 BIObytes

36 Industry News

118 Marketplace

departments

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100 CO-LOCATION Cellulosic Ethanol and Power Plant Co-Location: Savings in Synergy Th ere are signifi cant economic and environmental benefi ts from co-location for both ethanol plants and coal-fi red power plants.–By Frances Williams

106 ANAEROBIC DIGESTION Anaerobic Treatment at Ethanol FacilitiesEthanol waste streams can be eff ectively treated via anaerobic digestion, while producing renewable energy for ethanol production. –By Ryan Johnston

110 WATER CO2—A Cost Effective Alternative to Sulfuric Acid in Cooling SystemsRecovered CO2 can be injected into cooling water to create carbonic acid for pH control in cooling towers.–By Mike Mowbray

114 WORKING CAPITAL Ensuring Adequate Working Capital to Support the Business in Good Times—and BadEven with today’s market volatility, a system can be devised to project cash needs based on market trends and plant history.–By Scott McDermott

ETHANOL PRODUCER MAGAZINE July 2010


Projects Advance, Editorial Board Announced

ummer is here, and with it the 26th annual International Fuel Ethanol Workshop & Expo. This issue is being delivered to the FEW, June 14-17 in St. Louis. Generally the largest of the year, we have a packed issue for you. Associate editors Holly Jessen and Luke Geiver have gathered project development updates on multiple ethanol plants that completed construction this year

and are still being built, and visited with developers for the always popular report on proposed projects. As we’ve noted before, the build-out of new capacity has slowed dramatically in the past couple of years, yet the new crop of proposed projects is more interesting than ever, with new synergies being explored for fi rst generation sugar/starch ethanol facilities. Attention is shifting towards the next generation, where new projects are being proposed even as the fi rst crop of developers strive to get their projects success-fully launched. Anna Austin provides an update on a number of those cellulosic projects. This issue is rounded out with features about emerging from bankruptcy, engine developments, ethanol to drink, and as promised last month, Jessen’s report on the thrill of a presidential visit to an ethanol plant in Missouri, along with four excellent articles written by our industry contributors.

Ethanol Producer Magazine is launching an editorial board at this year’s FEW. We’ve long wanted to have a group we could call upon for background information, ideas and feedback for the editorial team, building relationships within the industry and helping us to become better imbedded. We’ve recruited 10 ethanol producers to serve on the fi rst board including Mike Jerke, Chippewa Valley Ethanol Co.; Jeremy Wilhelm, Cilion Inc.; Mick Henderson, Commonwealth Agri-Energy LLC; Keith Kor, Corn Plus; Walter Wendland, Golden Grain Energy; Neal Jakel, Illinois River Energy LLC; Bert Farrish, LifeLine Foods LLC; Eric Mosebey, Lincolnland Agri-Energy LLC; Steve Roe, Little Sioux Corn Processors; and Bernie Punt, Siouxland Energy & Livestock Co-op. Our thanks to these gentlemen for saying yes; we hope to learn much from them in the year ahead.

Susanne Retka Schill, [email protected]

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Susanne Retka Schill Editor's Note

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P U B L I S H I N G & S A L E S

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

Select 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.

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We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to [email protected]. Letters should include the writer’s full name, address and telephone number, and may be edited for purposes of clarity and space.

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PRESIDENTIAL VISIT

Steve Burnett, general manager of Poet Biorefi ning, Macon, holds a sample of ethanol during the president's April 28 tour of the facility. To his left are Secretary of Agriculture Tom Vilsack and President Obama, and to Burnett's right are Poet CEO Jeff Broin and John Eggleston, president of Poet Biorefi ning-Macon. PHOTO: GREG LATZGA


The Thrill of a Presidential Visit

President Obama’s April 28 visit to the Poet Biorefi ning plant in Macon, Mo., wasn’t just good news for one ethanol producer. Many believe the

whole industry can glean hope from that event.

By Holly Jessen


PRESIDENTIAL VISIT

Sen. Wes Shoemyer beamed from ear to ear the day President Barack Obama visited the Poet ethanol plant in Macon, Mo. Besides serving as a Missouri state legislator, Shoemyer is one of 311 farmer members, who, as a whole, own more

than 81 percent of the ethanol plant in Macon. Each year, some of the corn he grows is delivered to the ethanol plant. “This is more ex-citing than when I get a check,” he said, referring to dividend checks received periodically from his ethanol plant investment.

Shoemyer wasn’t the only only person excited by the president’s visit. Steve Burnett, general manager of the Macon plant, led Obama on a private tour of the plant before his speech in the grains building. He described the president as personable and told how he paused for a talk with six plant employees. During an unscheduled photo opportunity, Obama put his arm around Mary Barbieri, a longtime, hardworking employee. “I’d guess this is the highlight of her life,” Burnett said.

But it wasn’t just a boost for those associated with the Poet plant. Burnett also talked about what the president’s visit means for the whole ethanol industry and farmers who provide corn for that industry. “It’s really a great day for agriculture,” he said.

USDA Secretary Tom Vilsack, the former governor of Iowa was also in attendance. He told EPM that the president has a keen interest in both current biofuels technologies and newer, emerging technolo-gies. He confi rmed that the visit to the corn-ethanol plant should be a positive indication of Obama’s support for ethanol. “I thought it was a positive experience for both the president and for the industry,” he said.

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Shoemyer speaks to a TV news crew outside Poet Biorefi ning in Macon, Mo., the day President Barack Obama toured the ethanol plant.

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Tom Buis, CEO of Growth Energy, also in attendance, com-mented to EPM that unfortunately many people just don’t under-stand that ethanol is a viable alternative for oil that is here today, providing 10 percent of America’s fuel, and that it can replace more. The president’s tour of a corn ethanol plant says that the most powerful person in the world is behind the ethanol industry, Buis said. “I think that his visit today will help get that message out there.”

The President’s SpeechAfter touring the ethanol plant, Obama arrived at the scrubbed

and decorated grains building, where 133 invited guests, including Poet executives, board members, plant employees, media and oth-ers, had waited for about two hours to hear him speak. Half the plant’s employees, including offi ce staff, had worked with shov-els and squeegees in the preceding days to prepare for the event, Burnett said. A hush descended on the crowd when the president

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Members of the media walk to the plant entrance for the event, which in all was attended by 133 invited guests plus another 200 people traveling with the president.

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entered the facility that lasted about 15 minutes while he toured the plant pri-vately, until “Hail to the Chief ” began playing right before he entered the room. Only the birds—plentiful, as in any grains building—broke the silence, chirping cheerfully and loudly throughout the president’s talk.

Obama began his speech by congrat-ulating the employees of the Macon plant on their 10-year anniversary. Missouri’s fi rst ethanol plant started producing in May, 2000, with a capacity of 15 MMgy. Today it produces 46 MMgy and employs 45 people. “That means one of you is over achieving,” the president joked.

He also reminded those in attendance that this wasn’t his fi rst visit to an ethanol plant. In 2007, Illinois Sen. Obama was the keynote speaker at the grand opening of the Charles City, Iowa, ethanol plant now owned and operated by Valero Energy Corp.“I believe in what you are doing right here to contribute not only to our clean

energy future, but also to our rural econ-omies,” he said. “There shouldn’t be any doubt that renewable homegrown fuels are a key part of our clean energy future—a future of new industries, new jobs in towns like Macon, and new independence.”

Obama went on to reference biofuels multiple times during his brief remarks. The visit to Macon was part of the presi-dent’s “White House to Main Street Tour” that kicked off in December 2009 as a way for Obama to get out of Washington and spend time with American families. As Obama explained, he’s been visiting towns in middle America because they have a lot to teach, including common sense, and he wanted to talk about the economy, both the painful parts and the opportunities. There’s been some good economic news lately, he said, but that economic recovery hasn’t reached everyone yet. “Times are tough out here,” he said. “In some plac-es, times have been tough for a very long time.”

PRESIDENTIAL VISIT


Poet employees and key staff react as President Obama thanks them for the opportunity to visit the plant. In the front row to the far left are Vilsack and Jeff Broin, CEO of Poet.

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In the two years Obama spent running for president, he spoke to many people who told him the American dream was slipping out of reach. Times were hard for families and farmers and many young people believed they had to move away from small towns to make a go of it. Success stories like the ethanol plant in Macon, however, show that doesn’t have to be true, he said. “I believe that your company, and companies like yours, can replicate that success all across the country.” The goal is not just to bring the U.S. back to where it was before the economy took a dive, but to create new long-term growth and prosperity. Then, Obama listed several things that must happen to make that happen, including making schools more competitive and colleges more affordable, as well as reforms for health insurance

PRESIDENTIAL VISIT

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The Poet ethanol plant in Macon, Mo., fi rst produced ethanol in May 2000 and was the fi rst plant built in the state.

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and Wall Street. “And, it means igniting a new clean energy economy that gener-ates good jobs right here in the United States and starts freeing ourselves from dependence on foreign oil,” he said to applause.

Oil has an environmental cost and it threatens the security of the U.S., he continued. For decades the U.S. has talked about the fact that being depen-dant on foreign oil is bad news for the country’s economy, but working to do something about it has depended upon the price of oil. “We’ve grown actually more dependent on foreign oil every single year since Richard Nixon started talking about this danger of dependency on foreign oil,” he said. While the U.S. talked about the issue, other countries were acting. Places like China and Spain have made serious investments in clean energy, aiming to lead the race, and gain the jobs that come with it. Second best just isn’t good enough for this country, Obama said. The U.S. should be fi rst in wind power, fi rst in biofuels and fi rst in second-generation technologies, such as cellulosic ethanol, he said, and that’s why energy security has been one of his top priorities. Last year, through the Recov-ery Act, the administration made a large investment in clean energy, including ethanol, that is intended to create or save up to 700,000 jobs. The goal is to double the capacity for renewable energy from sun, wind and biofuels as well as triple biofuels production in the next 12 years. “That is a goal that we can achieve and it is being worked on right here at Poet, and we’re very proud of that,” the president said.

Other ReactionsEven those not able to attend

the event appreciated its importance. About 100 miles from Macon, Ryland Utlaut, general manager and president of Mid-Missouri Energy, a 100 percent farmer-owned ethanol plant located in Malta Bend, Mo., was excited about the event—even though it wasn’t at his plant. “I think it’s nothing but a positive for the

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Signs like this one, welcoming President Obama to Macon, were displayed in several places around the town of about 5,500 people.

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by their little town. Angela Bailey, who lives only a quarter of a mile from the ethanol plant, said she was thrilled. “It makes you think that he really does care about Midwest people,” she said. EP

Holly Jessen is associate editor of Ethanol Producer Magazine. Reach her at (701) 738-4946 or [email protected].

industry,” he told EPM. “No matter what plant affi liation you have, I think we’re all proud.”

Brian Jennings, executive vice presi-dent of the American Coalition for Ethanol was also happy about the visit. Still, Jennings, and others he talked to, had mixed feelings about the president’s speech. While Obama said good things about ethanol’s role in the nation’s en-ergy security and providing jobs for rural Americans, many were hoping for some-thing more. “Would I have preferred to hear the president express support for E15 or extension of the tax incentive?” he asked. “Of course. I think everyone in the ethanol industry would.”

Macon itself, population about 5,500, was abuzz over the fact that the President was coming to their town. Sev-eral businesses displayed signs welcoming him and it was a topic of conversation in many stores, restaurants and hotels. “We’ve never had anything happen like that in Macon,” said area resident How-ard Smith.

Although several expressed disap-pointment that the event was by invita-tion only, the basic theme was that it was a big deal just to have a U.S. president stop

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Obama supporters and protesters gathered together behind barricades across the interstate from the Poet plant to watch the President's motorcade pass by.

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PROJECT DEVELOPMENT—SUGAR/STARCH

U.S., Canadian PROJECT ROUNDUP The North American ethanol industry has had its share of bumps in the road, yet a dozen plants came online the past year, a handful are still under construction and some intriguing projects are proposed.

By Holly Jessen and Luke Geiver

Barley-based Appamatox Bioenergy is nearing completion in Hopewell, Va.PHOTO: FREDERIC WIGGINS, MUNRO PHOTOGRAPHY


In the past year, companies build-ing ethanol plants in the U.S. and Canada have completed con-struction or moved forward with

proposed projects. One happy success story is Aventine Renewable Energy Inc., which pulled out of bankruptcy and announced it would restart con-struction at two 108 MMgy plants in Mt. Vernon, Ind., and Aurora, Neb.

A year ago, EPM published a list of 14 ethanol plants that were under con-struction, the majority of which have been completed. In the U.S. that list includes, Abengoa Bioenergy of Indi-ana LLC, Mt. Vernon; Abengoa Bioen-ergy of Illinois, Madison; Archer Dan-iels Midland Co., Columbus, Neb.; Big River Resources Galva LLC, Galva, Ill.; Bionol Clearfi eld LLC, Clearfi eld, Pa.; Clean Burn Fuels LLC, Raeford, N.C.; Highwater Ethanol LLC, Lamberton, Minn., Homeland Energy Solutions LLC, Lawler, Iowa; and One Earth En-ergy LLC, Gibson City, Ill. Two plants in Canada completed construction as well: Kwartha Ethanol Inc., Havelock, Ontario, and Northwest Bio-Energy Ltd., Unity, Saskatchewan.

Other companies restarted opera-tions at formerly idled plants. Pacifi c Ethanol Inc. worked out a reorganiza-tion plan and restarted operations at its 60 MMgy Burley, Idaho, plant and White Energy emerged from bankrupt-cy and restarted its 110 MMgy White Energy Plainview plant in Texas. After Mid-America Agri Products fi led for Chapter 11 bankruptcy and mothballed a 44 MMgy ethanol plant in Cambridge, Neb., for about a year, it was restarted by new owner Nebraska Corn Process-ing LLC in March. Oil companies got in on the ethanol action too. Valero Energy Corp. purchased Renew Ener-gy, (now Valero Renewables Jefferson) for $72 million, and Sunoco Inc., pur-chased a 100 MMgy bankrupt plant in New York for $8.5 million that is cur-rently undergoing retrofi tting.

Of course, the news hasn’t all been good. For other projects, construction has stalled indefi nitely. Some sites for

potential ethanol plants have been sit-ting empty, with little to no activity for long periods—even years. One plant, Minnesota Energy, a 20 MMgy corn ethanol plant in Buffalo Lake, Minn., suspended production indefi nitely in March and laid off workers.

Under ConstructionThe list of ethanol plants using a

fi rst generation starch/sugar platform currently under construction in the U.S. and Canada is quite short. (For more information about cellulosic ethanol projects, see the following article.)

One plant on that list is ADM’s Ce-dar Rapids, Iowa, facility. The ethanol and agribusiness giant will add another 300 MMgy to its current capacity of 1.515 billion once construction is com-pleted. The company expects to wrap that up this summer.

With 25 operating ethanol facilities in Nebraska, Wolverine Ethanol LLC is currently working on two new facilities, Alcorn Energy LLC in Phelps Coun-ty, Neb., and Hi-Line Ethanol LLC in Frontier County, Neb. Tom Randazzo, manager of Wolverine says they are still putting together fi nancing for both fa-cilities.

In Hopewell, Va., Appamattox Bio-energy LLC, is pioneering a plant mod-el in the U.S. for a large, barley-based ethanol plant. President and CEO Craig Shealy says members of the plant toured ethanol facilities in Belgium, Austria, France and Spain to help in the design on the soon-to-be completed Virginia plant, working with their design team to create a one-of-a-kind 65 MMgy facil-ity. “There was no one plant we could go to that would be exactly like ours,” Shealy says. “We had to piece it togeth-er based on the components we could see and use.” The plant, which will be completed this summer and go online in early fall, will employ roughly 55 peo-ple when fi nished. “We are focused on originating winter barley,” Shealy says. “It is the best long term feedstock for our region.” The plant is capable of us-ing almost all cereal grains Shealy says,


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but is unique because of the facility’s design specifi c to barley. Shealy says he was very pleased with the team of de-signers, Katzen International Inc. and KBR Inc. during the process.

“We are also looking at more proj-ects, but we would like to see margins get a little better,” Shealy adds. In the meantime, the plant has already signed on with Land O’Lakes Purina Feed to market the distillers grains coproduct from the facility which will be called barley protein meal (BPM). Darian Car-penter of Land O’Lakes predicts the BPM will be popular in the U.S. and Eu-rope because it will be produced from non-genetically modifi ed grain. Located in what Shealy says is a historically in-dustrial town, the project has been well received by the community. “We’ve learned a lot in the process, even with-out a model to look at.” Shealy says. The Appamattox plant has no debt from the project. As for the outlook by Shealy on the grind margins, “We think they’ll get better. It just might take some time.”


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The Appomattox Bio Energy facility will use local barley as the main feedstock.

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ethanol technology provider Dedini S/A as well as U.S.-based green energy design/builder Fagen Inc.

Alpha Holdings LLC wants to build two ethanol plants in Iowa: Tama Renew-able Energy Campuses LLC, a 110 MMgy plant proposed for Tama, Iowa, and Dex-ter Renewable Energy Campuses LLC, a 54 MMgy plant proposed for Dexter, Iowa. Previously called simply Dexter Ethanol and Tama Ethanol, the names were changed to refl ect the fact that they will be ethanol and more, says Chris Mill-er, CEO and managing member, who de-clined to elaborate on what that included. Both plants are expected to utilize corn and cellulose as feedstocks. All permits are in hand and the sites are shovel ready, Miller told EPM. The plan is to break ground yet this summer. “It’s been a long struggle,” he adds.

In Cadiz, Ohio, a group of farmers want to build a 23 MMgy ethanol plant

that will produce both food and energy. Harrison Ethanol LLC will be an integrat-ed bio-refi nery that will produce, along with fuel, CO2, beef, milk, corn germ (oil), green electricity, renewable solid fuels and wet and dry distillers grains. The plan is to feed wet distillers grains on site to beef and dairy cattle. The manure from the animals and waste from the ethanol pro-cess will be used to produce biogas in an anaerobic digester for power needs with excess power sold to the grid. In April, the group obtained a fi nal permit from the Ohio Department of Agriculture for the confi ned animal feeding facility. It will have a capacity of 10,000 head of cattle and 2,000 cows.

In Illinois, the plans for a 117 MMgy corn ethanol plant called Algonquian Eth-anol are moving forward. Using Applied Process Technology LLC, the Princeton facility will produce 85 percent fuel grade ethanol and 15 percent high grade, indus-

Proposed PlantsEPM’s 2010 spring plant map

added proposed plants for the fi rst time, listing 28 proposed projects in the U.S. and four in Canada. Follow-ing is a brief review of some of the most promising or interesting proj-ects on that list.

Inland Pacifi c Energy Center LLC is one proposed project that is aiming for both ethanol and biodie-sel production, says Bob Doughty, project manager. The goal is to build a 138 MMgy ethanol plant and a 96 MMgy biodiesel plant in Stanfi eld, Ore. Although not all permitting was completed, funding for the project is nearly done and it’s possible the group could break ground by No-vember, Doughty says. The energy center will utilize multiple grains as a feedstock for the ethanol plant and will also market corn oil to the edible market. Katzen International Inc. is the ethanol technology provider and Crown Iron Works is working on the biodiesel side. The company plans to use canola as the biodiesel feedstock. In the future, besides traditional etha-nol and biodiesel, the company hopes to also make second generation etha-nol. “We’re designing our plant so that we could convert to cellulosic when it gets to the point where it is profi table,” Doughty says.

Already growing over 500 acres of sugarcane for its fi rst commer-cial sugarcane-to-ethanol facility, California Ethanol + Power LLC has big plans to construct multiple sugarcane-to-ethanol facilities in California's Imperial Valley and in the adjacent Palo Verde Valley.

The fi rst facility will be located in a county Specifi c Plan area and a California Enterprise Zone. The company reports that it is well into the permitting process, and expects its initial project to be in commer-cial operations mid-2012. CE+P is partnered with Brazilian sugarcane


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trial ethyl alcohol. “We are very optimis-tic about our new technology,” says Chet Perry, president and CEO of Algonquian. “We believe the technology can be used for retrofi ts. It’s exciting for the entire

industry.” The technology, which will be presented at the 2010 International Fuel Ethanol Workshop & Expo, includes combined heat and power (CHP) and the use of distillers grains for biomass-

based power. “This will enable us to have an enormous energy savings,” Perry says. The distillers grains will be sent directly to the boiler with a moisture content of 46-49 percent. The process will allow the


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The Aventine Renewables plant in Aurora, Neb., resumed construction after the parent company emerged from bankruptcy.

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kudzu plant. Originally from Japan, the plant is a vine-like weed that grows pre-dominantly in the South.

Three plants on the East Coast are still seeking fi nancing. The proposed loca-tions at Chester, S.C., Seaboard, N.C., and Jessup, Ga., will all use a corn feedstock and produce roughly 110 MMgy. “We have scrapped plans for a plant in Campbell-ton, Fla., at this time due to more restric-tive air permitting requirements required by Florida Department of Environmental Protection,” says Lee Hatch of East Coast Ethanol LLC, the parent company for all three proposed plants. “We are still work-ing to get our fi nancing in place for the other plants.”

South of those three proposed plants, Southeast Renewable Fuels LLC has its eye on a rural area outside Clewiston, Fla., for a 22 MMgy ethanol plant. The main feedstock will be sweet sorghum, al-though molasses derived from sweet sor-

ghum or sugarcane may also be used. The facility will include a combined heat and power plant, using sweet sorghum bagasse with excess power sold to the grid. The company also plans to install a CO2 dry ice plant on site, where gasses from the fermentation process can be converted to dry ice or liquid CO2 for sale. In March, the company submitted its air permit to the Florida Department of Environmen-tal protection for review. “Financing is in place and an announcement forthcom-ing,” says Don Markley, executive vice president and chief operating offi cer. The plant is the fi rst of three that the company hopes to construct. EP

Luke Geiver and Holly Jessen are asso-ciate editors of Ethanol Producer Maga-zine. Reach Geiver at (701) 738-4944 or [email protected] and Jessen at (701) 738-4946 or [email protected].

plant to generate roughly 15 mega-watts (MW) of electricity to run the plant, while the remaining 40-45 MW can be sold back to the local grid, according to Perry. The Princ-eton plant is already permitted with-out the use of the new technology, and emissions testing for the new techonology need to be completed for additional permits. The plant should come online sometime in 2011. “We are also hopeful and op-timistic that these new technologies will qualify and be approved with the EPA under the RFS2 program for an advanced fuel technology,” Perry says.

The fi rst ethanol plant on a res-ervation was closing in on fi nanc-ing in early May. Groundwork was expected to begin this summer at Wagner Native Ethanol LLC, a 50 MMgy plant proposed for Wagner, S.D. “We’re getting awfully, awfully close,” says Bill Riechers, project coordinator. The plant, which will be designed and built by Fagen Inc. and ICM Inc., will be different from other dry mills. It will have fraction-ation built into the original design rather than added in later, Riechers says. The plant will use the CO2 nat-urally present as part of the fermen-tation process to recover food grade oil. As a result, the distillers grains will contain 50 percent protein and no sulfur. Previous technologies for oil recovery often include the use of hexane gas, which is a “nasty, proven carcinogen” that is seven times more explosive than gas, Riechers says.

In the Southeast, a proposed non-corn-feedstock ethanol proj-ect, Agro-Gas Industries LLC, is planned in McMinn County, Tenn. “We are still seeking the neces-sary funding,” says Tom Monahan, partner and CEO of the company. “Our research is on-going with new feedstock sources and processes de-veloping each month.” One of the feedstocks the plant may use is the


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PROJECT DEVELOPMENT—CELLULOSIC

EPM reviews the status of U.S. cellulosic ethanol projects.

By Anna Austin




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Sprinkled evenly across the coun-try, the 25-plus cellulosic ethanol projects in the U.S. are utilizing a variety of conversion methods

and feedstocks. While some companies/projects have been around for years, sev-eral are quite new, and all are moving at different speeds. Overall progress has been slower than expected when the re-newable fuels standard (RFS2) was devel-oped in the Energy Independence and Se-curity Act with targets for mandated use of cellulosic ethanol included.

As many suspected would happen, the U.S. EPA signifi cantly dropped the 2010 cellulosic biofuel requirement with the release of the RFS2 fi nal rule. Initially an overly ambitious 100 million gallons, the 2010 requirement is now a signifi -cantly lower 6.5 million ethanol-equiva-lent gallons. The new cellulosic biofuel standard is based on an updated market analysis considering detailed informa-tion from pilot and demonstration-scale plants, an Energy Information Adminis-tration analysis, and other publically and privately available market information, according to the EPA.

Despite the huge overestimate, the EPA maintains that a number of com-panies and projects appear to be poised to expand production over the next sev-eral years. Additionally, since the cellu-

losic standard is lower than the level otherwise required by EISA, cel-lulosic credits will be available to obligated parties for end-of-year compliance, if needed, at a price of $1.56 per gallon (gallon-RIN). The EPA intends to continue to assess the growth of the cellulosic biofuel in-dustry and issue a notice of proposed rulemaking each spring and a fi nal rule by Nov. 30 of each year to set the renewable fuel standard for each ensuing year.

The fl edgling cel-lulosic ethanol industry is working hard to bring capacity online to serve the mandated vol-umes that will expand as installed capac-ity increases. The nation’s two top ethanol producers are moving forward with plans to keep them at the forefront of cellulosic ethanol production as well.

ADM and PoetPoet LLC unveiled its cellulosic etha-

nol pilot plant in Scotland, S.D., in early 2009, leading towards deployment of

Project Liberty, the planned 25 MMgy plant to produce ethanol from corn cobs to be co-located with Poet’s corn-to-eth-anol plant in Emmetsburg, Iowa. Poet CEO Jeff Broin says the company fi led an application [for a loan guarantee] with the DOE in April, and needs to have a favorable ruling on it this calendar year. “If we get that favorable ruling, we told the DOE that we will start construction by the end of this year, which puts us on


0.1 0.25 0.5 1.0 1.75 3.0 4.25 5.5 7.0 8.5 10.5 13.5 16.0 tba

RFS2 Cellulosic Biofuel Requirement

YEAR BILLION GALLONS2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023+

track to start up the facility in early 2012,” he says. This spring, Poet announced its long term goal to add 1 billion gallons of cellulosic ethanol production from corn stover to its existing 26 ethanol plants, and produce an estimated total of 3.5 bil-lion gallons of cellulosic ethanol by 2022, or more than 20 percent of the cellulosic ethanol mandated by RFS2.

Archer Daniels Midland Co. hasn’t made its goals public, but in December the company announced it had received a $24.8 million DOE grant to develop and construct a facility in Decatur, Iowa, to convert biomass into renewable fuel. “Biofuels remain the only widely available alternative transportation fuel available today. This project demonstrates ADM’s commitment to advanced biofuels and our work to meet the goals of the renew-able fuel standard program,” said Todd Werpy, ADM vice president, biofuels and biochemical research. The facility will fractionate lignocellulosics with one frac-tion used to produce ethanol and another fraction used to produce ethyl acrylate, a compound used in plastics, adhesives and coatings. The pretreatment process being developed will also be used in ADM’s ef-forts to commercialize biocrude, a project being conducted in alliance with Conoco-Phillips.

Earlier, ADM received DOE support

for a joint project with Purdue University to commercialize a fermentation process using highly effi cient yeast to convert cel-lulosic materials into ethanol fuel. On the feedstock side, ADM is partnering with Deere & Company and Monsanto to identify environmentally, agronomically and economically sustainable methods for the harvest, storage and transport of corn stover.

A number of other cellulosic etha-nol projects are moving through the pilot and demonstration stages aiming towards full commercialization. The following is a snapshot of a number of those projects.

Abengoa Since 2007, Spanish cellulosic etha-

nol producer Abengoa Bioenergy S.A. has operated a pilot plant in York, Neb., capa-ble of processing 1.5 tons of agricultural residues per day through an enzymatic hydrolysis process. In January, Abengoa announced it had teamed up with Mid-Kansas Electric Co. LLC to develop a cel-lulosic ethanol and power plant in Stevens County, Kan., that will produce 15 MMgy of ethanol and 75 megawatts of power each year. Abengoa Bioenergy Hybrid of Kansas will use corn stover, wheat straw and switchgrass as feedstocks, pro-cured from producers from seven coun-ties within a 50-mile radius of the plant.

ABHK will require about 2,500 tons of biomass per day. Abengoa received a $76 million U.S. DOE grant to help fund the project. Chris Roach, ABHK project de-velopment manager, says construction is slated to commence late 2010; comple-tion is targeted for 2012.

Bluefi re Lancaster, Calif.-based BlueFire

Ethanol Inc. owns a company-developed patented Arkenol Concentrated Acid Hy-drolysis Technology that processes wood wastes, post-sorted municipal solid waste (MSW), rice and wheat straws and other agricultural residues. The company has operated a pilot plant near its southern California offi ces for roughly fi ve years, and says it is “fully permitted and shov-el-ready” to begin work on a 3.9 MMgy facility in Lancaster. In addition, with a total of $88 million in DOE funding and a possible $250 million dollar DOE loan guarantee, for which BlueFire submitted an application in February, the company will construct a 19 MMgy commercial scale facility in Fulton, Mo.

Coskata Developed by Oklahoma State Uni-

versity and University of Oklahoma re-searchers, Coskata Inc.’s hybrid gasifi ca-tion/fermentation process technology is


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capable of converting multiple biomass feedstocks, including woody biomass, agricultural waste, energy crops and con-struction/industrial wastes, into synthesis gas.

Along with strategic investor General Motors and plasma gasifi cation company Alter NRG Corp., Coskata offi cially un-veiled its $25 million semi-commercial cellulosic ethanol facility near Madison, Pa., in October 2009, and soon after an-nounced plans for a commercial facility that will be located in the Southeast. Ac-cording to vice president of government affairs Wes Bolsen, the 55 MMgy facil-ity will utilize 1 to 1.2 million green tons of woody biomass, and upon successful commissioning, will enable the company to license the technology.

Enerkem Canadian cellulosic ethanol producer

Enerkem Inc. is planning a commercial- scale facility plant in Pontotoc, Miss. The

$250 million project will recycle and con-vert approximately 60 percent, or 189,000 tons of MSW at the Three Rivers Landfi ll where the 20 MMgy facility will be built. Besides a $50 million U.S. DOE grant, Enerkem recently scored a new round of fi nancing—$50.9 million—from existing and new investors, which includes Waste Management Inc. The company is fi naliz-ing project agreements says Marie-Helene Labrie, vice president of government af-fairs. The construction start date has not been determined, Labrie says, as it is de-pendent on the completion of a National Environmental Policy Act review by the DOE. Enerkem began operations in Janu-ary 2009 at its commercial-scale syngas-to-ethanol/methanol plant in Westbury, Quebec,

INEOS New Planet Energy INEOS Bio describes the heart of

its combined thermo-chemical and bio-chemical process as a patented anaero-

bic fermentation step, through which naturally occurring bacteria convert biomass gases from wood, vegetative residues or construction and demoli-tion materials into ethanol. In 2009, the DOE announced INEOS New Planet Energy LLC would receive a $50 mil-lion dollar grant to build an 8 MMgy advanced bioenergy facility in Indian River County, Fla., that will also pro-duce 2 MW of electricity. Construction is due to begin this summer.

KL Energy South Dakota-based KL Energy

Corp. employs a proprietary thermal-mechanical pre-treatment process that utilizes non-food wood and herbaceous feedstocks. The company began opera-tions at its 1.5 MMgy Western Biomass Energy demonstration scale facility in Upton, Wyo., in early 2008, where the company says it has successfully vali-dated the process and yields initially de-buted at its pilot facility in Rapid City, S.D. KL Energy expects to complete upgrades to its demo plant by the third quarter of 2010 to expand its feedstock fl exibility. It will restart with a multiple campaign demonstration program with sugarcane bagasse as feedstock.

MascomaUtilizing a Consolidated Biopro-

cessing technology that uses yeast and bacteria engineered to produce large quantities of enzymes, Boston-based Mascoma Corp.’s 200,000 gallon per year pilot plant in Rome, N.Y., went on line in the spring of 2009. Justin van Rooy-an, vice president of business develop-ment, says the pilot facility operates in-termittently, producing fuel for testing. The technology being demonstrated in Rome will be deployed at a commercial facility in Kinross township, Mich., a project for which Mascoma and affi li-ate Frontier Renewable Resources will be applying for a loan guarantee for this year, van Rooyan adds. One of Masco-ma’s notable partnerships is a feedstock


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The company has teamed up with BP Biofuels for a 36 MMgy commercial-scale project in south central Florida, and plans to break ground on the project this year.

ZeachemHeadquartered in Lakewood, Colo.,

Zeachem Inc. was set to break ground on its 250,000 gallon per year demonstration facility in Boardman, Ore., in early June. Zeachem describes its technology as a hy-brid process that fully utilizes all of the available carbon from the cellulose and hemicellulose in a biochemical (fermenta-tion) process, while producing hydrogen from the lignin fraction through a ther-mochemical process. In May, Zeachem received a $25 million grant awarded by the Offi ce of Energy Effi ciency and Re-newable Energy Biomass Program to add cellulosic ethanol production capability to the core ZeaChem technology, which cur-rently produces ethyl acetate. The com-

pany plans to use purpose-grown popular trees as a feedstock at its Boardman facil-ity, which is expected to begin producing in 2011.

There are other projects in the U.S. and Canada in various stages of develop-ment by Dupont Danisco Cellulosic Etha-nol, Iogen, Qteros, ICM, AE Biofuels, Pacifi c Ethanol and others. Some will be successful and some may not work out as anticipated. Either way, all of these proj-ects are forerunners in helping to meet domestic energy goals and loosen the tight clutch fossil fuels have on the U.S. EP

Anna Austin is a Biomass Magazine asso-ciate editor. Reach her at 701-738-4968 or [email protected]

processing and lignin supply agreement with Chevron Technology Ventures, a division of Chevron U.S.A. Inc., un-der which CTV will provide various sources of lignocellulosic feedstock to Mascoma. Mascoma will convert the feedstock to cellulosic ethanol using its CBP technology, and provide the lignin byproduct to CTV for evaluation.

Range FuelsSoperton, Ga.-based Range Fuels

Inc. went public in November 2007, announcing intentions to build the world’s fi rst commercially viable cel-lulosic ethanol plant with the help of a $76 million U.S. DOE grant. This spring, Range secured an $80 million USDA loan guarantee to complete the fi rst project phase and begin initiating phase two.

The fi rst project phase includes one gasifi er unit that will handle 125 dry tons of wood per day purchased from local suppliers, says CEO David Al-dous. “As we continue to scale up, we’ll use the same size equipment but add multiple (gasifi er) units,” he says. The plant, which employs a two-step ther-mochemical conversion process, was on schedule to start up the last week in May, according to Aldous. “[Commis-sioning] has gone extremely well thus far,” he adds.

Verenium In 1995, Verenium Corp., then

known as Celunol, secured an exclusive license to commercialize proprietary cellulosic ethanol technology developed at the University of Florida. In 1999, it completed a pilot plant in Jennings, La., where it successfully conducted combined C5 and C6 fermentations. In April, Verenium announced it had scored an additional $4.9 million from the DOE to fund ongoing activities at its operating 1.4 MMgy demonstration-scale facility, which is co-located with its pilot plant, as an extension of the grant previously awarded in July 2008.



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INTERNATIONAL


International Ethanol Report: 2010EPM takes a look at international developments with a special focus on Brazil.

By Luke Geiver and Holly Jessen


INTERNATIONAL

The heart of world ethanol pro-duction remains strongest in the U.S., but the pulse of in-ternational growth has started

to beat harder. Nearly every region of the world from the United Kingdom to the Asia Pacifi c has begun construction or proposed new ethanol facilities. The Global Renewable Fuels Alliance reports that in 2010, 22.7 billion gallons of etha-nol will be produced, a 16.2 percent in-crease from 2009. The following report represents a broad overview of this year’s industry growth, governing factors and future projects outside the U.S. and Can-ada giving a snapshot of ethanol use on a global scale: EPM’s 2010 International Report.

Guiding the WayAs in the U.S., several countries are

working on mandates requiring the use of biofuels. India’s government will mandate E20 use by 2011 and South Korea has de-creased tariffs for materials used to pro-duce renewable energy, not to mention the major role the Brazilian government plays in the production of Brazilian-based sug-arcane ethanol. “Europe is working on its own energy directive and that may impact what producers in the U.S. are able to ex-port,” said Tammy Klein, executive direc-tor for the Global Biofuels Center. Simi-lar to the obstacles in the U.S., Klein says

most countries implementing biofuels programs are seeking energy independence, diver-sifi cation and economic ben-efi t even amidst controversy over food and land use. “They will represent a large portion of demand in coming years,” Klein said. “They will also have issues that we have confronted in the U.S. with infrastructure and making sure the mandates work in conjunction with sub-sidies.”

Of all the governing fac-tors for ethanol production, the U.S. market remains the largest infl uence, although that may change in the future. “Many U.S. companies are looking for external markets,” Klein said. “For the fi rst time producers are paying attention to the global market. There’s a number of ethanol producers that won’t be able to get access to the California market, so they have to fi nd a market somewhere for their product.” Klein says markets in China and Europe continue to represent the largest opportunities for export. While governments all over the world have done a lot to support the bio-fuels industries, Klein said, “The industry is going to need regulatory certainty.”

Global GrowthAccording to Klein, etha-

nol demand will go up by 80 percent by 2015. Nearly 80 percent of that demand will be seen in the Western hemi-sphere, with the other 20 per-cent in Asia-Pacifi c. In Europe, Ensus Ltd., a 106 MMgy wheat-based biorefi nery in the U.K. began production this past year, and another wheat-based proposed project in Grimsby, U.K. is on the way.

In Vietnam, what started out as a speaking engagement, ended in a proposed agreement to construct eight ethanol fa-cilities. Zig Resiak, program director for Kentucky-based ethanol producer Agresti LLC, said the company has now formed Agresti Vietnam. The

new partnership between Agresti and the People’s Republic of Vietnam will de-velop municipal solid waste plants in the Saigon area, and with over 50 percent of the capital raised for the facilities, Resiak says the projects are moving along very quickly. “This is also moving faster than the U.S. because of the carbon credits,” said Resiak. “In this market, carbon is an asset.” Construction will begin in Decem-

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Tammy Kleinexecutive director, Global Biofuels Center

Zig Resiakprogram director, Agresti

ber 2011 and the plants will use feed-stock from local landfi lls. “The recep-tion has been incredibly positive over there,” Resiak said, adding the region is in need of environmental help.

Adding to the list of proposed plants in Vietnam, Toyo-Thai, a joint venture group between Italian-Thai Development and Japan’s Toyo Engi-neering, will begin constructing two ethanol facilities. The completion date for both plants is set for 2012 and each plant will use a cassava chip feedstock to create fuel-grade ethanol.

Two other Japanese companies, Itochu Corp. and JGC Corp., will begin construction of a sugarcane-based eth-anol plant in the Philippines. Just north of Metro Manila, the capital city of the Philippines, the plant will produce 14.3 MMgy. The Philippines Biofuel Act of 2009 requires the country to use a 10 percent ethanol blend in gasoline fuel by 2011.

BrazilWhile ethanol use is growing glob-

ally, no other country relies on ethanol

INTERNATIONAL


The majority of Brazil's 440 sugar mills produce produce sugar and ethanol.

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ICA

as much as Brazil. The country has already lifted tariffs on ethanol imports in hopes the U.S. might do the same. While the fu-ture between the U.S. and Brazil on biofu-el imports and exports is still unclear, the role the South American country will play in 2010 and beyond is not hard to see.

Brazil is the largest grower of sug-arcane and sugar producer in the world and the second largest ethanol producer behind the United States, according to Brazilian Sugarcane Industry Association (UNICA) which represents sugar, etha-

nol and bioelectricity producers in Brazil. During the 2008-'09 sugarcane season, Brazil produced a total of 7.2 billion gal-lons (27.5 billion liters) of ethanol, ac-cording to statistics from UNICA and the Ministry of Agriculture, Livestock and Food Supply.

While Brazil’s ethanol production numbers have more than doubled since 2002-'03, it hasn’t been totally smooth sail-ing. Production held fairly steady, around the 11 or 12 billion liter mark, from 1990-'91 to 1995-'96. After a two-year climb

to 15.3 billion liters in 1997-'98, the amount of ethanol produced dropped to a low of 10.5 billion liters three years later. Since then, the numbers have been steadily climbing to today’s totals of 27.5 billion liters. Growth is slow-ing, however, Joel Velasco, UNICA’s chief representative in North America, told EPM. During the current growing season, UNICA estimates that 10 new ethanol plants/sugar mills will be built. The number of new plants coming on-line was 19 last year, down from 30 and 25 in the previous two years.

Of about 440 sugar mills in Brazil, the majority include ethanol produc-tion, which means there is some fl ex-ibility between producing sugar and ethanol. This is limited, however, by the fact that most new ethanol plants don’t have sugar factories and older factories don’t have spare capacity, he said. About 100 of those 440 plants only produce ethanol and bioelectrici-ty—no sugar.

The bulk of the ethanol, or more than 91.3 percent, is produced in the south central region of Brazil. This area includes Sao Paulo state, which is responsible for 60.7 percent of the ethanol production. In 2008-'09 the sugar and ethanol company Sao Mar-tinho was the highest producing com-pany in that state, with 411.9 million liters of ethanol production. The rest of Brazil’s ethanol, or 2.4 billion liters produced last season, came from the northeast region.

The Brazilian ethanol industry is very different from the U.S. ethanol industry—and it’s not just about corn versus sugarcane. In Brazil, two types of ethanol are produced and sold to consumers: anhydrous and hydrous ethanol. Anhydrous ethanol, which is the standard in the U.S., contains about 0.5 percent water by volume and is blended with gasoline for fuel use. Hy-drous ethanol, on the other hand, can have about 5 percent water. In the last

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were controlled by foreign capital. That added up to 14 percent of the approxi-mately 590 million tons of cane crushed in the 2009-'10 harvest. Foreign control of Brazilian ethanol and sugar companies is now up to 22 percent, not including the latest deal between Petrobras and French controlled Guarani Sugar and Ethanol Group. “Trailing all this activity is a series of events that became more noticeable in the fi rst decade of the new millennium, with the industry in Brazil functioning freely and without government controls,”

Velasco said. “This has truly been the decade of the rise of the cane industry, with effi ciency and productivity gains that could only have occurred in a free market environment.” EP

Luke Geiver and Holly Jessen are associ-ate editors of Ethanol Producer Magazine. Reach Geiver at (701) 738-4944 or [email protected] and Jessen at (701) 738-4946 or [email protected].

growing season, 66 percent of the eth-anol produced was hydrous ethanol.

The type of vehicles on the roads in Brazil has changed over the years. In 1984 more than 94 percent of au-tomobiles made by major automakers could burn E100, or hydrous ethanol, according to UNICA. A variety of fac-tors caused automakers to rapidly de-crease the number of ethanol-powered vehicles produced and by 2001 only 1 percent of the vehicles on the road ran on E100.

In 2003, fl ex-fuel vehicles (FFV) were introduced in Brazil. Today, the majority of vehicles in Brazil are FFV, which can run on E100, gasoline or any mixture of the two, according to the National Association of Automo-tive Vehicle Manufacturers. In fact, during 2008 there were 2.3 million li-censed FFVs on the road compared to 217,021 gas vehicles and only 84 etha-nol vehicles.

Whether driving an FFV or not, thanks to a blending mandate in Brazil, all gasoline contains at least some etha-nol. Although the blend mandate was temporarily lowered to 20 percent for three months this year due to a short crop, it’s now back up at 25 percent.

The infl ow of foreign capital to Brazil’s sugar and ethanol industry has increased recently—especially in 2010. In the fi rst few weeks of the year alone, there were four major transactions. “Foreign capital is not new to the in-dustry and isn’t necessarily dominant,” Velasco said, “as illustrated by one of those recent transactions: the merger involving Brenco and ETH, in which domestic capital is by far in the major-ity.” He also mentioned deals where Brazilian companies have been pur-chasing stakes in foreign-owned com-panies.

In mid-2007, foreign capital held a majority stake in 7 percent of the Bra-zilian sugarcane industry. By the end of 2009, 44 Brazilian sugarcane mills

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FINANCE

BEATING BANKRUPTCY

For ethanol plants in fi nancial distress, the way out can seem almost impossible, but several plants this year have

negotiated a path through reorganization.

By Luke Geiver



FINANCE

The era of emergence has offi cially started. Over the past year, several bankrupt and idled ethanol plants

have come back online or started the journey to recovery, successfully re-bounding from thin crush spreads, bad profi t margins and volatile corn prices. Although the threat of bank-ruptcy still looms for some, the num-ber of plants exiting from the Chapter 11 bankruptcy reorganization process demonstrates the industry is seeing greater fi nancial stability.

Pointing to the unfavorable mar-ket conditions of high corn prices and low petroleum costs that even-tually pushed many other facilities into bankruptcy, Aventine Renewable Energy Holdings Inc. announced this spring that it had not only emerged from Chapter 11 reorganization, but would also resume con-struction at two, nearly complete, 80 MMgy facili-ties in Nebras-ka and Illinois. Like Aventine, Pacifi c Etha-nol Inc., has nearly com-pleted a reorganization process that will reduce the debt of the company. After halting production at all but one of fi ve ethanol plants in 2009, Pacifi c restarted operations at its 60 MMgy Burley, Idaho, facility this spring. In Texas, 110 MMgy Plainview Bioen-ergy has resumed operations and is producing at full capacity after par-ent company, White Energy emerged from bankruptcy in March. The for-mer Renew Energy plant in Jefferson, Wis., also resumed full operations after Valero Energy Corp. purchased the 110 MMgy corn-based ethanol plant in January 2010. The Renew plant fi led for bankruptcy and, unable to successfully reorganize, eventually was sold to Valero for $72 million.

Another oil compa-ny, Sunoco Inc., pur-chased a 100 MMgy bankrupt plant in New York for $8.5 million. The former Northeast Biofuels plant is currently being retrofi tted by ICM Inc., and will start operations in the fall of 2010.

While some struggling facilities ultimately sold out, as did the owners of the Renew and Northeast Biofuels plants, many oth-ers attempt to survive and maintain a majority stake. Jeff White, former CEO of Renew Energy, says main-taining majority ownership is diffi cult: “No one trusts the debtor.” White ex-

plains many other factors contribute to the diffi culties associated with suc-cessful reorganization under Chapter 11, yet the stories of others show there is a way out.

Keys to SurvivalWhile every plant faced the same

unfavorable market conditions, Brad-ley Kruse, a member of the bankrupt-cy and renewable fuels practice group at BrownWinick law fi rm, says plants normally have different levels of fi -nancial distress when they enter into Chapter 11 proceedings. “Predicting what will happen in the process is very diffi cult,” Kruse says. “It’s on a case-by-case basis, and almost every-one that enters will try reorganization

FINANCE


Brad Kruselawyer for the Bankruptcy and Renewable Fuels practice group, BrownWinick

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fi rst.” Even before offi cially fi ling, White says a plant should prepare for the hard times to come. “Accept the bankruptcy as early as you can in order to get debtor-in-possession fi nancing,” White recommends. “If you spend all your money before you get to bankruptcy, you have no lever-age.”

For White, this is the fi rst step of the process—preparing and sav-ing before offi cially fi ling. By reserv-ing a portion of capital, a plant will have the ability to slow down the re-organization process with the bank or lenders because the plant will still be able to pay the bills. Avoiding a loan request just to remain in opera-tion allows the debtor to obtain an-other loan or additional fi nancing. By maintaining cash instead of exhaust-ing all capital before fi ling, a plant has a better chance to effectively negoti-ate with a bank and fi nd a way to suc-cessfully reorganize without losing everything through liquidation.

Kruse says there are other ave-nues a plant can take to avoid liquida-tion as well. Automatic stay provisions prohibit a creditor from collecting a debt which gives the debtor room to breathe, and executory contract pro-visions allow the debtor to cancel un-favorable future contracts for commodities. Ultimate-ly, White and Kruse both say that slowing down the process is crucial for the plant’s survival.

The most important thing a plant can do to avoid a total loss is to do what the plant most likely does best—run. Trevor Hinz, director of business and development for ICM Inc., says the underlying reason for many recent bankruptcies was not operating defi -ciencies at the plants. White explains that the Jefferson plant, which was initially valued at roughly $9 million, was purchased by Valero Corp. for

nearly $90 million due to the facility’s ability to maintain operations while in Chapter 11. Whether the plant is seeking new investors or simply hoping to sell for a premium price, maintaining an operational status will positively affect the outcome, even though it costs money every day to keep running. “You will sell for more if you stay open,” White says.

“The plant’s technologies are as-sets that, if shutdown, can’t be show-cased,” Kruse says. The visual of a running plant indicates to investors what’s not working at a plant, and more importantly, what is working, White says. “If a plant is operating at full capacity and does have a few bugs, shutting down the plant will only halt the process of locating and fi xing those problems.” A halt in op-erations also means a plant may lose another key asset, existing employ-ees.

Although the easiest path to emergence is to maintain operational status there are other options. In the event a plant totally shuts down as did many of the former VeraSun plants after it fi led bankruptcy in 2008, oth-ers can assume management in the interim. During the VeraSun bank-ruptcies, Hinz says that some of the

banks found themselves owning ethanol assets that they had to do something with. While they fi gured out what to do, ICM was brought in to maintain the plants. “We protected the human assets and the physical assets so that when the plants were ready to go again, they would be ready to come back on-line,” Hinz says.

During a shutdown period, Hinz says ICM will

create an individual plan for each fa-cility. Then, members from ICM will go the facility and perform needed tasks ranging from general mainte-nance to employee updates on the

FINANCE


Trevor Hinz,director of buisiness and development, ICM

status of the plant. In some cases, Hinz says ICM can inherit an existing staff and in others, may bring in extra staff for spe-cial needs. With ICM currently retrofi t-ting a New York plant for the new owner

Sunoco Oil, Hinz says that as more and more refi ners get into the industry, the industry will grow and learn from them (refi ners). “We will become a more so-phisticated industry,” Hinz says.

Avoiding the PastGrowing into an industry that is more

highly evolved, or “sophisticated” is ex-actly what White believes will prohibit a repeat of past bankruptcies among etha-

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nol producers. Although crush spreads are currently favorable for most facilities, a down cycle is always on the horizon. “We will go through cycles where margins get better,” White says. “And then you have more supply again and subsequently, mar-gins get shrunk again. Anytime the supply and demand are close together the indus-try will cycle downward, but with growth, the bad times won’t be as bad.” Growth in White’s view means two things. One, de-veloping and employing the most qualifi ed and skilled people with a background in the industry. And two, creating a plan that

prices margins by including both the price of corn and ethanol into the equation.

“Personnel overall is a small cost in the big picture,” White says. He attributes a large portion of the success in the sale of the Jefferson plant to the fact that he brought in a team of individuals that had an extensive background and skill set for each required position. “Many plants un-der invest in people when they should be fi nding the best out there.” White explains that a $300 million ethanol company is no different from a $300 million company in a different industry. While the non-etha-

nol company most likely has a top level, highly skilled employee or set of employ-ees, most ethanol plants simply promote from within without ever attempting to locate more qualifi ed individuals.

Even with the most highly qualifi ed people running the plant, White says that a plant can’t be successful no matter who is running it, if speculation exists. “A plant needs to make a plan that includes the price of corn and the price of ethanol while pricing margins.”

With a string of record ethanol out-put production numbers dating back to October of 2009, the positive trend for producers is clear. But as White points out, this may not always be the case. “You better be ready for another rainy day, be-cause we (the industry) will have another rainy day.” EP

Luke Geiver is an associate editor of Etha-nol Producer Magazine. Reach him at (701) 738-4944 or [email protected].

FINANCE

'You better be ready for another rainy day, because we (the industry) will have another rainy day.'

Jeff White, former CEO, Renew Energy

ENGINES


A Boost to the

SystemA team of engine developers from Ricardo Inc. has downsized

a standard engine using ethanol-infused technology. The result: a smaller engine with huge gains.

By Luke Geiver


ENGINES

The move to downsize wouldn’t normally indicate that some-thing big is on the way, but a team of engine developers from

Ricardo Inc. is showing that in the ethanol industry, less may actually mean more. For over a year the team from Ricardo, in part-nership with Growth Energy, has been de-veloping an ethanol boost direct injection (EBDI) gasoline engine. Weighing 400 to 500 pounds less than a comparable diesel engine, the EBDI engine grew out of an in-terest in ethanol fuel properties and the idea of engine effi ciency gained through down-sizing. The nearly complete EBDI project combines fueling strategies, combustion control and ethanol boosting technology. The result: a smaller, more effi cient engine optimized for ethanol that will provide bet-ter fuel economy and performance than a fl ex-fuel engine.

To demonstrate that these mileage gains and performance enhancements are truly happening, Growth Energy provided Ri-cardo with two GMC Sierra 3500 HD trucks (each with a curb weight of 6,000 pounds). The Ricardo team began recording data on

the trucks with the standard engines intact. At the current stage of testing, the team has substituted the 6.0-liter V8 gasoline engine—standard in the vehicles—with a smaller EBDI-infused 3.2L V-6 and begun testing their work. “We are trying to go to the extreme end of the downsizing spectrum,” says Rod Beazley, product group director for Ricardo’s spark ignited engine department. “We wanted to see how much we could gain in both fuel economy and performance.”

Beazley, who initially started the ethanol based engine project, says the substituted EBDI provides vastly superior performance to the standard gas engine based on tests al-ready completed.

Ricardo’s technology utilizes the latent heat of vaporation and the high octane rat-ing of ethanol fuel to create fuel economy improvements up to 30 percent. “What we are seeing is engine technology catching up with fuel technology,” says Chris Thorne, di-rector of public affairs for Growth Energy. “This is an example of an engine leader say-ing they can make the leap.”

The leap for Ricardo meant designing a cutting-edge engine based on a combina-

tion of pre-existing technologies, using a fuel commonly associated with less-than-optimal fuel mileage. “One of the biggest challenges we dealt with was pushing the limits of cur-rent base engines,” says Luke Cruff, chief en-gineer of the group. “There were constraints because of what is currently used.” Thorne points out that what currently exists in most vehicles, standard engines with low blends of ethanol fuel, was a trend that the team from Ricardo was not afraid to move away from. “Most fl ex-fuel vehicles just have a minor tweak. None of them have been optimized for fuel (ethanol) qualities,” he said.

Engines such as the standard 6.0L V8

ENGINES

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the team removed from the 1- ton dem-onstration truck have problems linked to what the Ricardo team calls “overfuel-ing.” To overcome this problem Beazley says the team changed and upgraded most of the major architectur-al components in the 3.2L V6 engine.

Cruff explains that the “overfueling” Beazley refers to happens because a typical blend of gasoline does not provide the high octane rating or have the cooling capability of ethanol blends. As the engine’s cylinders build more pressure and take in more air, the cylinders become octane thirsty. The implementation of a fuel with a high la-tent heat of vaporation like ethanol acts as a cooling agent, reducing the temperature when the cylinders start to get “thirsty.” With most engines, as the temperature rises in the cylinders, the probability of engine knock increases. The engine knock occurs

as oxygen pushed into the cylinder heads detonates off the spark and high tempera-tures, and for most engines to reduce the knock means lowering that temperature

in the cylinders. Without the reduction of the knock—that pinging sound car own-ers sometimes hear under high load oper-ation—the pressure and torque created in

ENGINES

Rod Harrischief engineer, Ricardo

Growth Energy has worked with Ricardo on the EBDI engine since the project fi rst started.

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the cylinder heads cannot remain at the intended level, and the result equals a loss in power, performance and the reduction in fuel economy as more fuel is needed to lower the temperature.

Beazley says with the EBDI system, the engine doesn’t have to introduce extra fuel to keep the components cool because of the ethanol cooling agent the system injects into the cylinders. “We are focus-ing on improving thermal effi ciency,” Cruff says. The EBDI takes advantage of engine control algorithms that detect both the amount of needed ethanol and the proper time to inject the fuel. Along with the injection system, the engine uses

an exhaust gas recirculation system that helps to control the temperature levels of the engine and the tailpipe emissions.

The combination of the ethanol in-jector technology, exhaust gas recircula-tion system, and the ability to measure how much of the ethanol is needed at a particular time has the Ricardo team excited about the implications of their work. Beazley says the project started out of his interest in the octane rating of ethanol, and now has Ricardo President Kent Niederhofer willing to say that the EBDI could eventually replace conven-tional engines.

Rod Harris, another chief engineer

ENGINES

ETHANOL PRODUCER MAGAZINE July 2010

Another Approach to Direct InjectionRicardo is not the only team utilizing ethanol’s cooling power in en-

gine development. A group of former Massachusetts Institute of Technol-ogy colleagues, now working under the name, Ethanol Boosting Systems LLC, has developed a similar engine. “We have been working for about 10 years on ways to improve the effi ciency of gasoline at an affordable cost,” says Daniel Cohn, co-founder of the company. “We want engines that everyone can afford to buy.”

After forming a relationship with Ford Motor Co., Cohn says they began testing their idea through computer modeling at MIT. The results of the testing revealed one thing, according to Cohn: ethanol’s ability to suppress unintended knock is tremendous. “If you pour alcohol on your arm, it cools your arm,” Cohn sites as an example. “The same process happens within the engine when using ethanol.” The MIT colleagues are developing a downsized engine that produces torque levels equal to those of larger engines. Cohn explains that through the use of the ethanol booster technology his team has developed, a typical V8 5.0-liter engine could be replaced with a 2.0L engine, ultimately resulting in a 25 percent gain in effi ciency at one-third the size.

EBS’s direct injection (DI) alcohol-boosting engine incorporates a small volume of ethanol fuel taken from a separate ethanol tank, and injects the ethanol into the cylinders at the desired time. The team is still running tests on the engine and estimates the DI system will cost roughly $1,500. “We want to minimize the gallons put in the secondary tank used for the injection system,” Cohn says. One important aspect of the engine is the potential for use in current fl ex-fuel vehicles. Cohn says the DI en-gine makes fl ex-fuel cars more attractive as the engine could draw from the E85 tank, for use in the injection process.

Cohn says his team started with the question, “Why not use ethanol capabilities to make this happen?” In the latter stages of the process, it seems ethanol may have always been the answer.

working on the engine, points to the performance numbers as a reason to agree. “There is an extreme level of per-formance with this engine. The EBDI engine using E85 will produce 900 new-ton meters of peak torque with 450 plus horsepower while a regular engine using pump gasoline will produce 775 newton meters of peak torque with 400 horse-power,” Harris says.

And the performance gains aren’t limited to one type of ethanol blended fuel or one size of engine according to Harris. “We think this technology is scal-able. We can take the engine technology and scale it down to fi t a passenger car,” Harris says. “The goal is to run on what-ever fuel the engine has been given. EBDI controls the fueling, the spark timing, and the EGR rate. Ultimately, no matter what blend of fuel, the engine will always be running at an optimal level.”

The multiple application possibilities of the EBDI system also have Growth Energy enthused by the implications of what the Ricardo team has created. “You could put the technology in a tractor, a bus, the back of a skid steer and it is much more cost effective than a diesel,” Thorne says. After starting the research, the Ri-cardo team recognized early on that their work could reach a wide spectrum of vehicle owners. To ensure that the tech-nology will function and perform to the team’s desired level, the GMC trucks are

now being put to the test outside of the lab. “We wanted to get this into running demonstrator vehicles,” Beazley says. He explains that although the current testing results speak for themselves, there are still those who doubt the achievements of the EBDI. A trip to the 2010 Washington Auto Show helped to cure that problem.

“At the show people were curious,” Thorne explains. But like many people who didn’t attend the show, Thorne says, there were also those who doubted the ethanol optimized engine. “All they had to see was the return on the mileage and they were onboard.”

In early fall, the team will have com-pleted fi nal testing on the engine in the heavy duty trucks, testing they say will so-lidify what the engine can do. In store for the engine this summer is a range of tests including extreme climate conditions of arid, desert situations and below-zero temperatures, as well as city stop-and-go driving. Until the testing is complete, the team plans to showcase their technology with one goal in mind. “Getting our mes-sage out to a broader audience is what we are trying to do,” Beazley says. EP

Luke Geiver is an associate editor of Ethanol Producer Magazine. Reach him at (701) 738-4944 or [email protected].

ENGINES


The Ricardo Engine was unveiled earlier this year at a Washington, D.C. event by, left, to right, Gen. Wesley Clark, Poet CEO Jeff Broin, Growth Energy CEO Tom Buis and Ricardo President Kent Niederhofer.

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USE


Anyone working in the ethanol industry has heard the joke about drinking their work. For a few, however, ethanol for

human consumption is no laughing matter.

By Holly Jessen


USE

In the United States, about 12 billion gallons of fuel ethanol was produced in 2009. In the same year, beverage alcohol totaled only about 1.2 billion gallons. That number includes 905 million gallons of wine and beer produced in the U.S. plus another 337

million gallons of distilled spirits bottled in the U.S. for domestic use, according to Alcohol and Tobacco Tax and Trade Bureau records.

Looking at the two industries side by side brings up a question. Could an ethanol plant already producing fuel ethanol also produce ethanol to drop an olive in and drink out of a martini glass? Johannes “Hans” Van Leeuwen, professor of environmental and biological en-gineering at Iowa State University, thinks ethanol plants should reach out and grab a share of the alcohol market. “It’s nothing to be sniffed at,” says the researcher, who’s working on perfecting a way to purify raw ethanol for beverage purposes.

Drink It or Burn It A few ethanol producers are already making it work. Chip-

pewa Valley Ethanol Company in Benson, Minn., has been pro-ducing vodka alongside fuel and industrial grade ethanol since 2002. Ethanol producer Archer Daniels Midland Co. produces both fuel and beverage alcohol—vodka and gin—from corn.

The amount of ethanol for human consumption produced by CVEC is just a drop in the bucket compared to the total U.S. numbers. The ethanol plant’s nameplate capacity is 45 MMgy, but Mike Jerke, general manager of CVEC, won’t say exactly how that’s divided among fuel, industrial ethanol and alcohol to drink. “The vast majority is fuel and continues to be fuel,” he

says. “But we have seen some really nice growth in the specialty areas.”

The plant’s fi rst foray into the world of alcohol for human con-sumption was with Shakers, the premium vodka it produces for Infi nite

USE


The ethanol plant in Benson, Minn., is well known for also producing vodka.

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Spirits. “It’s a good vodka,” says Jerke. “I think anybody that has done a little tasting would recognize that.”

Besides Shakers, CVEC also produces ethanol for about half a dozen other companies that use it in various whiskies, vodkas, fl avored vodkas and bourbons. Recently, the plant went though the rigorous cer-tifi cation process to produce certifi ed organic products, such as CROP Organic Vodka and Prairie Organic Vodka, he says.

At CVEC, the fermentation pathways for fuel, industrial ethanol and beverage ethanol are very different, starting with the feedstocks. The plant takes in No. 2 fi eld corn for fuel and industrial ethanol pro-duction, as well as rye and wheat to make two separate fl avors of vodka, and organically grown corn for Prairie Organic Vodka, Jerke says.

Fermentation of fuel ethanol and industrial grade ethanol does sometimes overlap for part of the process. However, for the most part, fermentation of the different types of alcohol is quite different, though Jerke didn’t specify how. “It’s considerably more involved for the indus-trial side and an additional step further for beverage grade,” he says. De-spite those limiting factors, the plant does have some fl exibility to shift production, depending on profi t margins. Producing alcohol for more than one use helps CVEC mitigate risk. “I think that’s the key,” Jerke says. “Diversifi cation really is the key in our industry, with as volatile as commodity markets are.”

Production of beverage alcohol requires a distilled spirits permit, which CVEC has through its company Glacial Grains Spirits LLC. The permit allows CVEC to ship an undenatured, consumable product, so the vodka can be bottled and labeled off site. A distilled spirits permit is quite different from a fuel ethanol permit, according to Art Resnick, di-

USE

CVEC-produced Shakers Vodka comes in two fl avors, rye and wheat.

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EC

rector of public and media affairs for the Tax and Trade Bureau. “The procedure to qualify as a distilled spirits plant is a lot more complex than that required of an alcohol fuel plant,” he tells EPM.

The vodka and gin produced by Archer Daniels Midland are all made from the same corn that is used to make fuel, Beth Chandler, company spokesperson, told EPM. The ADM plant in Peoria, Ill., produces fuel, industrial grade alcohol and a high-proof grain neutral spirit that is used as a stock to make beverage alcohols like vodka. The plant in Clinton, Iowa, has the capability of producing fuel alcohol as well as vodka and gin, although currently the plant is making gin from beverage alcohol shipped in from the Peoria plant. “One of the benefi ts of producing both fuel and beverage-grade alcohol at one plant is that the milling and feed processing part of processing the corn can be shared for a number of different grades of alcohol products,” Chandler says.

In all, ADM produces a total of 24 prod-ucts from corn, including food ingredients, animal feed, fuel ethanol and beverage alcohol. All the products are made by separating No. 2 dent fi eld corn into corn oil, for cooking

oil; corn fi ber and hulls, for animal feed; corn gluten, used in poultry feed; and corn starch, which is converted into dextrose, a sugar. Be-sides being the main ingredient for ethanol, dextrose is used to make high fructose corn syrup to sweeten soft drinks and baked goods or xanthan gum to provide body, texture and stability in things such as salad dressings, gra-

vies and sauces. Dextrose is also used to make biodegradable plastics at the company’s fi rst commercial bioplastics facility, which is co-located with the ethanol plant in Clinton, she says.

ADM isn’t the only big name ethanol company that has experience producing etha-nol for multiple uses. In the 1990s, Abengoa

USE


Lingshuang Cai uses her nose, along with gas chromatograph-mass spectrometry, to separate and identify various impurities in commercial alcohols and raw ethanol.

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acids that smell like body odor or phenolics that give a barnyard or smoky smell.

In the lab, researchers compared 13 com-mercial vodkas to the new product, purifi ed by ozone, Cai says. One very smelly vodka con-tained as many as 49 impurities—including some that are simply not healthy for a human to ingest. Although the researchers were care-ful not to say a brand name, they did say the product is very expensive vodka. The major-ity of the vodkas didn’t smell quite so bad and contained about 20 to 30 impurities. Only two had about 10 impurities. “There are a lot of bad smells from those commercial vodkas,” Cai says.

Smell is very important to taste, Van Leeu-wen says. While the mouth is only sensitive to four or fi ve of the most basic fl avors, the nose is actually very sophisticated. Everything else humans taste is done through the nose. “It’s ul-timately up to the consumer to evaluate some-thing with their noses and decide if they will buy it or not,” Koziel explains.

There’s still more work to be done. The technology works in a lab scale and a small pilot scale. The next step, Koziel says, is to ramp it up to full pilot and commercial scale. “We think we know how to bring it up to the next level,” he says. “The core of technology is there.”

Negotiations to commercialize the tech-nology in the U.S., Canada and Mexico are on-going, Van Leeuwen says. Although they’re not ready to release details yet, Mell O3z is work-ing with a company in California that wants to commercialize it. The goal is to work with an ethanol plant in Iowa that is currently making fuel ethanol, and convert the plant to ethanol production for human consumption. In the fu-ture, other ethanol plants could potentially add consumable ethanol as a value-added product for a relatively low cost. “We all know that booze costs a lot more than gas does, so there’s obviously a big benefi t,” he says. EP

Holly Jessen is associate editor of Ethanol Producer Magazine. Reach her at (701) 738-4946 or [email protected].

Bioenergy, then High Plains Corp., made a beverage product at its ethanol plant location in York, Neb. “We later decided that our fu-ture was in fuel ethanol rather than beverage,” says Christopher G. Standlee, executive vice president of Abengoa, “and the additional distillation equipment used for the industrial and beverage quality alcohols was removed and moved to another plant for expansion purposes there.”

The World’s Purest Vodka Around six hours south of CVEC’s plant,

startup company Mell O3z LLC (pronounced mellows) has developed a patent-pending pro-cess using ozone and granular, activated car-bon to remove impurities from diluted neutral grain spirits, or ethanol. Mell O3z’s concept is that a standard fuel ethanol plant could, after further distillation, use its process for purifi ca-tion and market undenatured corn ethanol as the purest vodka on the market. “That sounds like snake oil talk, but I can tell you that there are good scientifi c reasons for making that statement,” says Van Leeuwen, vice president of Mell O3z.

In the U.S., chlorine is used for 95 per-cent of disinfection and purifi cation, while in Europe, ozone is more widely used. Since he’s familiar with the use of ozone for purifi ca-tion, Van Leeuwen started with cheap brandy and whiskey, “really rotgut stuff,” he says, and used ozone to turn it into something not ex-actly high class, but drinkable. In other words, although the process won’t turn a $5 bottle of alcohol into a $30 bottle, it will improve the $5 bottle. “You can get from $5 to $10 with our process, with only pennies,” he says, adding that the process can be used with mul-tiple feedstocks for the manufacture of vodka as well as other items like cough syrup and mouthwash.

Van Leeuwen is working with Jacek Koziel, an ISU associate professor, and Ling-shuang Cai, an analytical chemist, to analyze raw ethanol on a chemical and sensory level in novel ways. From a chemical standpoint, Koziel says, there are a lot of similarities be-tween the aromatic compounds in wine and hog waste, both substances he has analyzed in the lab. For example, a chemical and sensory analysis of a commercial alcohol might iden-tify sulfur containing compounds producing a skunky sewer-like odor, leftover volatile fatty

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As the world con-tinues to focus on cellulosic ethanol as a renewable and

sustainable source of energy, efforts within the biofuels in-dustry to make it more com-mercially viable are increas-

ing. Biomass feedstocks are in abundant supply, and the reduction in CO2 emissions—up to 90 percent compared to gasoline—is impossible to ignore, as is the potential of cellulosic ethanol to boost en-ergy independence and create

jobs. Recent improvements in process technology and pro-duction costs have many com-panies pursuing the dream of bringing this advanced biofuel to market.

One promising strategy for making cellulosic ethanol

economically viable is the co-location of an ethanol facility and a coal-fi red power plant. There are signifi cant economic and environmental benefi ts for both industries when they are tied together in the same loca-tion in the form of feedstock

Cellulosic Ethanol and Power Plant Co-Location: Savings in SynergyFeedstock sharing, cost savings and regulatory compliance are among the benefi ts in co-location.

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

CO-LOCATION. BY FRANCES WILLIAMS

Contribution

Cellulosic ethanol developer Inbicon has a plant co-located with its parent company, Danish power producer DONG Energy.

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sharing, cost savings and regu-latory compliance.

When a power plant is co-

located with a cellulosic ethanol facility, it can take advantage of co-fi ring lignin in its coal boilers

to produce electricity. Lignin’s clean-burning properties and high BTU levels make it an ef-

fective power source, one that results in much lower carbon emissions than those produced

Economic Assumptions:

Net earnings:- Savings in coal consumption (80 cents/gigajoule)- Power selling price (30 USD/MWh)- Green electricity premium ($30/MWh)- Ethanol sales

Coal2300 MW

Power966 MW

Biomass420 MW(2000 Metric-ton/day)

Power869 MW

Base case Biomass Co-Firing

Power Plant

Coal2070 MW

GreenPower58 MWHeat

115 MW

Power Plant

Residue 230 MW

75 MW

17 MW

Ethanol63 MMgy

EthanolPlant

Net cost:- Biomass purchasing- 2nd-gen. ethanol plant excluding CHP ($205 million)- Power plant retrofit and tie-in ($22 million)- Other 2G plant operating cost (91 cents/gallon ethanol)

Efficiency Comparison

The above diagram illustrates co-location with a medium-sized coal-fi red power plant. A portion of the normal coal input can be replaced by the lignin byproduct of the biomass ethanol production and generate cleaner electricity as well as higher value liquid biofuels.

SOURCE:NOVOZYMES

Chart 1


CO-LOCATION. BY FRANCES WILLIAMS

by burning coal. This environmental benefi t is increasingly relevant in light of the current renewable portfolio stan-dards (RPS) found in state regulations that could become part of federal policy in the future. An RPS requires electricity providers to produce a certain percent-age of power from renewable energy sources within a set timeframe. There are currently 30 states, including the District of Columbia, with some form of RPS, with goals ranging from 10-50 percent of electricity produced from renewable sources within the next 20 years. Eligible sources of the renewable energy include hydro, wind, solar, geothermal and bio-mass. There are some clear benefi ts of RPS policies:

Improved energy securityReliable energy deliveryProtection against fossil fuel price

and supply volatilityEnvironmental effects—improved

air, soil and water qualityDespite the fact that power plants

moving towards increased “green elec-tricity” production will pay more to pur-chase biomass than coal, an effective co-location setup can result in profi t for both the electricity and ethanol producers (See Chart 1). Lignin—which is of signifi cant value to the power plant—is basically a byproduct for the ethanol facility that must either be turned into landfi ll waste or burned into steam and electricity at a relatively high cost. A similar tradeoff occurs when the power plant’s excess steam and electricity (which is currently wasted) is sold to the ethanol plant. This exchange allows the ethanol producer to realize a signifi cant capital cost savings—up to one-third—by avoiding the need to invest in onsite cogeneration equipment, including a lignin-fueled boiler and tur-bine generator system.

Besides these environmental and economic advantages, other benefi ts to the power plant include the following:

- Internal rate of return=10% (above inflation)- 20-year pay-back- 10-year accelerated tax deduction scheme

-400

-300

-200

-100

0

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200

300

400

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Ethanol Price (USD/gallon)

NPV co-f iring, GE Premium=$30 /MWh

NPV Ethanol/Power Plant co-location, GE Premium=$30 /MWhNPV co-f iring, GE Premium=0 /MWh

NPV Ethanol/Power Plant co-location, GE Premium=$0 /MWh

(GE= green electricity)

Net Present Value

Models suggest that a coal-fi red power plant direct co-fi ring biomass will suffer a loss (dashed green line) unless the green electricity (solid tan line) revenue is high. Above $2.35 per gallon of cellulosic ethanol produced in a co-located plant, the power supplier profi ts (dashed black line). With a green electricity credit, profi ts are realized at $2.10 per gallon (solid brown line). No subsidies on feedstock or ethanol are assumed.

Chart 2

SOURCE:NOVOZYMES


A more cost competitive power supply

Capacity in-crements that meet load growth

Portfolio di-versity

Increased lo-cal control of sup-ply assets

Co-location is of signifi cant val-

ue to the cellulosic ethanol plant both through direct cost savings and opera-tional effi ciency. In addition to the previ-ously mentioned reduction in capital and equipment expenses, the plant can save in areas such as labor, warehousing, site development, and energy and fuel costs. There is also great potential for fl ow inte-gration, value-added waste stream recov-ery, and the sharing of management and overhead expenses. Other benefi ts in-clude additional industrial infrastructure and a market for the lignin byproduct. Furthermore, onsite generation results in a more reliable and affordable supply of both power and steam. Co-location also further reduces the carbon footprint of an ethanol plant and allows it to be more competitive via its decreased operating costs.

In addition to these synergies, co-location of ethanol and power plants contribute signifi cant economic develop-ment to their community in the form of new jobs.

A recent Novozymes case study ex-plored various co-fi ring and co-location production scenarios. (See Chart 2) Our process modeling showed that in situa-tions where a green electricity premium of $30 per MWh is charged, an ethanol price of approximately $2.10 per gallon (before any ethanol subsidies) is the break-even point for a co-location producer. Ethanol prices above this amount will allow the

producer to make more money producing ethanol from just the cellulose and hemi-cellulose (and burning the lignin separately for power) than by burning the whole bio-mass feedstock. This same model showed that when no green electricity premium is included, the break-even price for the cel-lulosic ethanol is approximately $2.35 per gallon (pre-subsidy).

With plans in place for a growing num-ber of bio-electricity plants, there is some concern about competition for biomass feedstock between power and cellulosic ethanol producers. Experts at Novozymes are not subscribing to this theory. Cynthia Bryant, global business development man-ager, explains: “We don’t see this as an ei-ther/or situation. Instead, we believe that it is feasible to optimize the feedstock to meet the needs of both the ethanol and

electricity industries. When effective co-location strategies are put into place, any increase in startup costs is well worth the investment because of the higher return in the end.” EP

Frances Williams is a communications spe-cialist at Novozymes. Reach her at [email protected] or (919) 494-3048.Cynthia Bryant

global business development manager, Novozymes

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Energy use is a prima-ry cost consideration for ethanol produc-ers. It is crucial that a

modern ethanol facility fi nd ways to reduce energy costs to minimal levels, increasing the plant’s posi-tive net energy balance in order to increase profi t margins. For this reason an increasing number of ethanol facilities are installing energy-producing anaerobic di-gestion systems. Anaerobic diges-tion is an ideal fi t for the ethanol

industry, converting waste streams inherent to the ethanol production process into sources of renewable energy, while reducing the carbon footprint of the facility.

Anaerobic technology relies on the conversion of organics into a biogas rich in methane. The concept of anaerobic digestion is not a new one; cultures around the world have harnessed the power of methane gas for centuries. In the late 1800s, for instance, the British town of Exeter and the In-

dian city of Bombay were drawing gas from local waste sources to use as a fuel for gas street lamps.

Since then, advances in sci-ence and technology have led to new, highly-effi cient anaerobic processes housed in cost-effective, emission-free digestion systems, which offer many advantages to those producing ethanol. While many people are concerned about odor, modern designs allow for a completely sealed digester, which creates an odorless anaerobic sys-

tem for a pleasant operating envi-ronment and happy neighbors.

Anaerobic Digestion for Ethanol Production

A number of waste streams in ethanol facilities require cleanup. Evaporator condensate streams, dryer/scrubber streams, and any number of other miscellaneous waste streams specifi c to a given facility must be treated. Aerobic systems are one possible solution, but the drawbacks of this technol-

Anaerobic Treatment at Ethanol Facilities Anaerobic digestion is an effective system to treat waste streams and produce renewable energy for ethanol plants.


ANAEROBIC DIGESTION. BY RYAN JOHNSTON

Contribution

The Biothane instrumentation and control skid includes reactor pumps, a chemical pump table and touchscreen control panel.

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ogy signifi cantly reduce their cost-effectiveness. One issue is that they produce a very high amount of sludge which must be constant-ly conditioned and disposed of, a process which requires energy, time, effort and an investment in specialized equipment. Aero-bic systems also require massive amounts of energy to operate and sustain. As energy use is already a primary concern of today’s etha-nol producer, it makes little eco-nomic sense to install a system that requires large amounts of energy to operate, particularly when other, better options exist.

Anaerobic systems are a far more effective solution, and are not susceptible to the problems aerobic systems face. Rather than act as an energy draw, anaerobic systems produce renewable, meth-ane-rich biogas for the facility, of-ten generating more energy than

the system requires. Anaerobic systems also convert infl uent or-ganics almost entirely into meth-ane and CO2, generating very little excess sludge in the process. The high organic load in the waste streams of ethanol facilities makes

this water particularly well-suited to an anaerobic process.

For these reasons, high-rate anaerobic treatment systems have become a standard feature in etha-nol facilities. In addition, effl uent from anaerobic treatment systems

can often be recovered and re-turned to the ethanol production process, lessening the facility’s wa-ter demands.

Thin Stillage DigestionWater is no longer the only

This 14-foot diameter reactor was custom-built and shipped to an ethanol facility in Kansas for the treatment of evaporator condensate stream.

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ANAEROBIC DIGESTION. BY RYAN JOHNSTON

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This method of handling thin stillage has two primary drawbacks. First, evaporat-ing thin stillage is energy intensive, and cre-ates yet another high-energy-related cost for the ethanol facility. Second, the price of corn syrup fl uctuates. As the cost-effectiveness of thin stillage evaporation relies on a certain minimum price point for corn syrup, evapo-ration has become an unreliable and often economically unsound treatment method.

Luckily, thin stillage is rich in organics, and can easily be converted anaerobically into a source of renewable, sustainable bio-gas. For this reason, anaerobic systems can often provide a more reliable, cost-effective process for treating thin stillage. In addition to generating energy, the solids extracted from the thin stillage treatment system’s ef-fl uent can be sold for use as an effective soil conditioner. As an additional benefi t, many states now offer renewable energy credits, awarded to companies that offset their use of the grid with renewable energy they produce themselves.

Of course, anaerobic treatment of this stillage is not always the best solution. Oc-casionally, energy costs are low enough, and the demand for distillers dried grains with solubles and corn syrup is high enough, that evaporation and resale of these byproducts provides a greater value than the energy sav-ings recognizable through anaerobic treat-ment. Ethanol producers should take care to work with a reputable, knowledgeable sup-plier of anaerobic technology to determine whether a particular thin stillage stream is an economically-viable source of energy for a particular facility.

Comingled DigestionSome facilities go even farther. A fasci-

nating trend has developed recently where ethanol production plants have been built alongside a dairy or beef cattle operation, for the primary purpose of creating a symbi-otic, energy-effi cient system between the two utilizing anaerobic digestion. These facilities use comingled, constantly stirred anaerobic digesters to mix the ethanol facility’s thin still-

source of anaerobically-treatable waste in etha-nol facilities. In recent years, the demand for renewable, sustainable energy combined with the fl uctuation of corn syrup costs in the mar-ketplace has put new pressure on ethanol pro-ducers to fi nd new, more cost-effective sources of energy. This market pressure has led to in-novation by Biothane and companies like it, opening the door to the anaerobic treatment of thin stillage.

Thin stillage is a natural byproduct of the

biomass fermentation process, generated dur-ing the centrifuging of whole stillage out of the fi rst distillation column. As a general practice in an ethanol operation, some of this stillage is used as back-set for the facility’s cooking steps. But the remainder of this thin stillage has tradi-tionally been delivered to an evaporator, which concentrates the liquid into corn syrup. The corn syrup is then either sold as-is or is added to the distillers grain, which is then dried and sold as distillers dried grains with solubles.


age with manure collected from the neigh-boring farm or feedlot. The digester creates vast amounts of energy, so much that its out-put can satisfy 70-90 percent of the ethanol plant’s entire energy demand. This kind of enormous reduction in energy costs leads to rapid payback for the ethanol producer, followed by greatly reduced operating costs. In addition, the plant’s dried distillers grains, no longer mixed with corn syrup, remain an excellent food source for the neighboring cattle.

This closed loop system is both elegant and effi cient. Animals generate manure, and ethanol production generates thin still-age. The manure and stillage are fed into a comingled anaerobic digester, eliminating the need for either party to dispose of these waste streams by conventional methods. The digester produces biogas which generates enough electricity to satisfy up to 90 percent of the ethanol facility’s needs. The ethanol facility, in turn, produces dry grain which is fed back to the cattle, which in turn generate more fuel for the digester. The system pro-duces very little waste, and both the ethanol facility and the farm benefi t.

Considerations Before PurchaseBecause of its numerous benefi ts, an-

aerobic treatment has become a mainstay at ethanol plants all over the country and around the world. Digestion systems can be incorporated in the early stages of facility design, or can be added to existing ethanol plants without complication.

When adding anaerobic treatment, a system should be custom-designed and cus-tom-built for the site from the ground up. There are three important characteristics of any successful anaerobic digestion system: it must be suitable, technically viable, and eco-nomically sound. Economically, an anaerobic system should pay for itself over a timeline that makes sense for the facility. The system must be technically viable, designed to handle the biological needs of the facility’s infl uent, at average as well as peak conditions. Finally, and most importantly, the system must be

suitable for a particular site. No treatment sys-tem, anaerobic or otherwise, is appropriate for every single plant.

Biothane, or another known expert in an-aerobic digestion, will study your facility’s spe-cifi c needs and present a plan that ensures your anaerobic systems meet all three of these im-portant criteria. Be sure to talk to people who are operating systems designed by your poten-tial anaerobic technology designer. Verify fi rst-hand that these other facilities are receiving the

benefi ts they were promised from their system, that they’ve received excellent training, support and post-commissioning service. Capital cost is an important factor, but so is system reliabil-ity and long-term support. EP

Ryan Johnston is sales leader digestion technolo-gies at Biothane LLC, a business unit of Veolia Wa-ter Solutions & Technologies. Reach him at [email protected] or (856) 541-3500.

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Sulfuric acid has been used to re-duce alkalinity in cooling towers for decades. By neutralizing car-bonate alkalinity with acid, scal-

ing potential is reduced on heat exchang-ers, and often systems can be run with less

water. However, handling large quantities of acid can be hazardous and requires special permitting. More importantly, the cost and availability of sulfuric acid var-ies from year to year. In 2009, acid pric-es were more than double current costs.

World market sulfur prices are increasing, so it’s likely that the price of sulfuric acid will be volatile again in 2010.

Using carbon dioxide gas for pH con-trol as an alternative to sulfuric acid can be economically practical in many appli-

CO2—A Cost Effective Alternativeto Sulfuric Acid in Cooling SystemsCaptured CO2 from the fermentation process can be used for pH control in cooling water, reducing scale formation.


WATER. BY MIKE MOWBRAY

Contribution


cations. This is particularly true at fuel ethanol plants which generate CO2 as part of the fermentation process. This gas is vented through a scrubber, where a portion of it can be recaptured for use as a replacement for sulfuric acid. This recovered CO2 can be injected into the cooling water, where it dissolves in the water to create carbonic acid. The acid formed can replace 60-90 percent of sulfuric acid used in the tower. For a typical 50 MMgy ethanol plant, this can save $15,000 to $35,000 annually at to-day’s acid prices.

Benefi ts to CO2 Use

Carbon dioxide infl uences water pH differently than sulfuric acid. When sulfuric acid is added to water contain-ing carbonate alkalinity, the alkalinity is neutralized, as shown in the following equation:

When carbon dioxide is added to water containing carbonate alkalinity, the alkalinity is converted to bicarbon-ate alkalinity, as shown:

Carbon dioxide doesn’t eliminate al-kalinity like sulfuric acid does. Instead, by converting carbonate to bicarbonate alka-linity, the potential for scale formation is signifi cantly reduced. This distinction is important, and can be useful beyond just pH control in many applications.

There are other benefi ts to using CO2 for cooling water pH control. First, it is less likely to cause corrosion than sulfuric

acid, since CO2 treated water will typically buffer out at a pH of 8.3. It is possible to drive the pH lower with excessive over-feed, but in practical applications, the pH won’t ever go below 6.0, so the chance of an accidental acidifi cation of the cooling water is greatly reduced. Also, reducing sulfuric acid feed reduces the amount of sulfate in your discharge water. Again, us-ing a hypothetical 50 MMgy ethanol plant,

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CaCO3 + H2SO4

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CaCO3 + CO2 + H2O

Ca(HCO3)2


WATER. BY MIKE MOWBRAY

sulfate concentration in the cooling tower bleed would decrease by up to 200 parts per million, eliminating between 180,000-270,000 pounds of sulfate discharge an-nually.

One more benefi t to CO2 injection is seen in plants trying to reduce water discharge through recycling where the introduction of additional contaminants reduces its usefulness. Replacing sulfu-ric acid with carbon dioxide can provide

more fl exibility for water reuse within a plant.

Planning ConsiderationsU.S. Water Services has successfully

converted several plants to pH control using carbon dioxide. This experience has yielded several important lessons, the most important one being that CO2 is not a complete replacement for sulfuric acid. A sulfuric acid backup system must

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be available for two reasons—as a failsafe in case your gas feed breaks down for some reason and, because a supplemental acid feed may be re-quired in the summer, due to the re-duced solubility of carbon dioxide in warm water. In the winter months, we have found that CO2 is usually suffi cient on its own.

Carbon dioxide can be trans-ferred into cooling water by means of either a blower or a compressor. At the cooling tower, a specially de-signed injector is used to introduce the carbon dioxide gas into the sys-tem. The location and design of the injector are crucial to effective car-bonic acid formulation. If multiple towers are treated from the same sys-tem, careful balancing of the piping pressure and header elevation is re-quired, because the gas will always go to the point of least resistance. This can be challenging, as the back pres-sure will change based on water level in the tower basin, pipe length and even temperature. It’s often easier to have a separate feed system for each tower.

Choosing the correct transfer system is also important. Compressor systems are generally the less expen-sive option, and they can control gas injection over the broadest range of conditions. Downsides for compres-sors are high noise levels while op-erating, shorter life time, and higher maintenance costs. In particular, it is critical that all moisture be removed from the CO2 prior to compressing it in the storage tank. Carbon dioxide can dissolve into the water, and form carbonic acid in the bottom of the tank, resulting in tank leaks.

Positive displacement blowers have the benefi t of being less main-tenance intensive and have a longer


life expectancy. They can be fi tted with silencers, which make them qui-et enough to have in the main plant area. The downside is the up front cost, which is higher than a compres-sor system. In addition, the operating range is not as broad, so the blower system must be carefully designed for the application in which it will be used.

Microbiological ControlsOne of the concerns of adding

CO2 to a cooling tower is the quality of that gas. In an ethanol production process, CO2 is re-covered from a fer-mentation scrubber. A well-run scrub-ber will remove the majority of etha-nol, ethyl acetate and acetaldehyde vapors. However, a small percentage will still get into the

CO2 and then into the tower, where it could potentially act as a food source for bacteria growth. It is important to maintain good microbiological control in your cooling system when you switch to CO2 for pH control. A well-thought-out biocide program, coupled with regular monitoring for microbiological growth, makes this managable.

Adding carbon dioxide to your cooling water system can be an ef-fective method of controlling cool-ing water pH. It has the potential to provide several benefi ts to a plant, beyond just the economic payback. The basic concept is to remove CO2 from the scrubber vent, and transfer it to the cooling tower basin. Some careful design is required to deal with

the temperature and moisture content of the gas, and the distance that it needs to be transferred. In addition, there are sev-eral ways to control the amount of CO2 added to the system. Even the injection header must be designed specifi c to the plant layout. Depending on the amount of piping required, and the spot mar-ket price of acid, the payback can be 12 months or less. As with any project, the

ultimate success will be based on careful design up front, and careful monitoring during operation. EP

Mike Mowbray is the marketing and technology manager for U.S. Water Services. Reach him at [email protected] or (866) 663-7632.

Mike Mowbraymarketing and technology manager, U.S. Water Services


If there is one thing ethanol plant managers and boards have learned through the recent challenging market

environment, it is the importance of ensuring adequate cash re-serves. We’ve all heard the phrase

“cash is king,” but it takes on a whole new meaning when you fi nd yourself running short.

Over the past year, too many plants learned the hard lessons of what happens when you run out of cash. The fact is that the worst

time to raise cash or working capi-tal is when you need it. And, when you run out of cash, your op-tions become rather limited. The BFO here (blinding fl ash of the obvious) is make sure you don’t run out of cash by ensuring you

have suffi cient working capital—before you need it. To do that, it is of the utmost importance to forecast cash sources and uses for the future and then ensure there are adequate cash resources on hand to fund those future needs.

Ensuring Adequate Working Capital to Support the Business in Good Times—and BadA systematic approach incorporating operating history with fi nancial and statistical methods helps in forecasting liquidity needs in volatile markets.


WORKING CAPITAL. BY SCOTT MCDERMOTT

Contribution


Of course, this is easier said than done, especially given today’s market volatility and uncertainty.

The goal is to balance shareholder demands for dividends with ensuring ad-equate working capital to protect the core business. Anticipating and translating market volatility and risk to defi ne implications for the company’s working capital is no small task. That said, just because it is diffi cult does not mean it is impossible. In fact, many successful com-modity trading organizations and banks have developed sophisticated programs to ensure their organizations have the liquidity required to support their operations in good markets—and bad.

Ascendant Partners has been working with indepen-dent ethanol plants and their banks to develop a system-atic approach for a com-pany to use to ensure it has adequate liquidity to support the business. The program incorporates a combination of operating history with sound fi nancial and statisti-cal methods to provide in-formation the company can employ to minimize the risk of a cash shortfall. The pro-gram does not replace board and management experience and intuition or their com-modity risk management programs. It simply provides another tool for the board and management to use in guiding the business through challenging waters.

The program con-sists of two key elements: a working capital reserve fund to protect the core business and an early warning system that helps ethanol companies anticipate cash shortfalls uti-lizing Ascendant’s fi nancial simulator, a sound fi nancial and statistical modeling ap-proach. The outcome of the simulation is a risk adjusted, free cash fl ow forecast.

Value-at-risk systems are common at large com-modity-based companies, trading companies and banks. These systems range from daily market capital-at-risk systems in trading or-ganizations to stress testing and portfolio capital alloca-tion systems in banks. From its experience working with the ethanol companies and banks in the industry, Ascen-dant came away with a com-prehensive understanding of the important concepts. The best concepts from each were leveraged to develop a solution for the ethanol pro-duction companies to bet-ter manage working capital in the face of external risks such as policy changes or fi -nancial shocks, and the more direct risks of large hedging losses, negative margin envi-ronments, plant disruptions or even plant idling.

To determine the right funding level for the working capital reserve fund, Ascen-dant works with the board and management through a disciplined process to defi ne their risk tolerance; to look

at use history, which helps in identifying the probabil-ity and duration of negative markets/events; and to quantify the likely impact of those factors on working capital. This systematic ap-proach to defi ning the need for a reserve fund better po-sitions management to com-municate and support the value of the fund with key stakeholders.

The second part of the process is to develop a disci-plined, sound approach for forecasting expected cash sources and uses given mar-ket conditions and outlook. There are a number of ways in which market and opera-tional volatility and risk im-pact the business. The obvi-ous one is how prices and ethanol production margins affect the business, but there are other factors to take into consideration as well.

Recently we saw com-modity prices run higher and many plants found them-selves short on working cap-ital because of the additional cash requirement of the higher value of inventories and accounts receivable. The higher prices also increased working capital needs due to margin calls on hedg-ing positions. In addition to the above considerations, it is important to look at the working capital implications of an operational disruption or sustained negative margin environment that may sug-gest idling plant operations. It is also important to proac-

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WORKING CAPITAL. BY SCOTT MCDERMOTT

Figure 1 A fi nancial simulator combines relevant commodity trends with company fi nancial information to project cash fl ow needs.

SOURCE:ASCENDANT


tively work with lenders to ensure the revolving working capital lines are adequate to support the busi-ness in volatile markets. Remem-ber, the worst time to raise cash is when you need it.

The Ascendant fi nancial sim-ulator uses 20 years of history to capture the interrelationship be-tween ethanol, gasoline, corn and natural gas. The historical prices are used to project the distribu-tion of potential prices given the interrelationship between markets.

The forecasted price distributions for ethanol, corn and natural gas are run through the company’s fi nancial pro forma (see Figure 1) to produce the probability of free cash fl ow or risk-adjusted free cash fl ow for three and six months. The new price distribu-tions and updated fi nancials are revised on a regular basis so the system can serve as an early warn-ing system for free cash fl ow.

The outcome of the simu-lation is a risk-adjusted series

of free cash fl ow forecasts that management can use to anticipate cash needs going forward. Figure 2 illustrates one of the summary tables produced as part of the process.

Managing cash fl ow can be challenging, but there tools avail-able to assist ethanol plant man-agement and boards in determin-ing the appropriate cash reserve fund level. For further informa-tion on managing your working capital or to obtain a free copy of

a case study demonstrating how this tool works, please contact the author. EP

Scott McDermott is a partner in Ascendant Partners Inc. Reach him at [email protected] or (303) 221-4700.

GETTING ANSWERSFROM FIELD TO FUELALTERNATIVE FUEL SERVICES

CUSTOMIZED SOLUTIONS FOR INVESTORS, PRODUCERS,MANUFACTURERS, SUPPLIERS AND TRADERS

• Ethanol lab testing & certification to ASTM specifications • 3rd Party EPA Engineering reviews for ethanol and biodiesel plants under RFS2 • Analytical lab services for DDGS, ethanol, grains & co-products (export and domestic)• Trade related field inspections and surveys for grains, DDGS & feed ingredients• Field Inspections for custody transfer (ethanol & biodiesel domestic and export markets)• Tank/pipeline inspection & calibration, flow monitoring and measurement consulting• Corrosion inhibitors/additives and cargo treatment services• On-site laboratory management outsourcing• Sustainability /ISO OHASA audits, training and certifications for production plants• 3rd party carbon verification/certification under various world standards/schemes

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6 Month Risk Adjusted Free Cash Flow Summary (July 31, 2010)1,000 dollars, except where noted different

Budget50%

Probability75%

Probability95%

Probability99%

ProbabilityFree Cash Available for Financing Activities(1) 15,940 16,668 16,021 15,094 14,114 (less) WC Reserve Fund(2) (3,960) (3,960) (3,960) (3,960) (3,960)Ending Free Cash Available for Financing Activities 11,980 12,709 12,061 11,134 10,154(1) Free Cash Flow Before Deducting Working Capital Reserve Fund and After Allocating Distributions Monthly @ 40%(2) Working Capital Reserve Fund consists of cash requirements to sustain a 3 month plant idle

Figure 2 An example of a summary table produced as part of the fi nancial simulation process.

SOURCE:ASCENDANT


Ag Products & ServicesEquipment

Associations/OrganizationsGrowth Energy202-545-4000 www.growthenergy.org

Red River Valley Clean Cities651-227-8014 www.CleanAirChoice.org

Clean Cities

Twin Cities Clean Cities Coalition651-223-9568 www.CleanAirChoice.org

ChemicalsAnti-Microbial

Ferm Solutions859-402-8707 www.ferm-solutions.com

Desiccant

3 Angstrom630-980-5205 www.3Angstrom.com

Enzymes

CTE Global, Inc.847-564-5770 www.cte-global.com

Novozymes919-494-3101 www.novozymes.com

Yeast

Ferm Solutions859-402-8707 www.ferm-solutions.com

Martrex,Inc.952-933-5000 Ext 18 www.martrexinc.com

CleaningDryer Systems

Hydro-Klean, Inc.515-283-0500 www.hydro-klean.com

Premium Plant Services, Inc.888-549-1869 www.premiumplantservices.com

Seneca Companies800-369-5500 www.senecaco.com

Ductwork


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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 fi rst-time advertiser wanting to raise awareness of your business or a fre-quent display advertiser looking for added exposure, EPM Marketplace is the perfect solution.


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Plate-Frame


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Tank Cleaning Equipment

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Agra Industries, Inc.715-536-9584 www.agraind.com

Andy J.Egan Co.616-791-9952 www.andyegan.com

Plant Construction


Railroad Tracks

Tanks


ATEC Steel620-856-3488 www.atecsteel.com

J.C. Ramsdell Enviro Services, Inc.877-658-5571 www.jcramsdell.com

Westmor Industries320-589-2100 www.westmor.biz

ConsultingEnvironmental

Aquaterra Environmental Solutions, Inc.877-913-8200 www.aquaterra-env.com

Cantley Inc.865-360-4080

ICM, Inc.877-456-8588 www.icminc.com


Feasibility Studies

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

Management Services


Plant Optimization



Project Development


Safety

Rail Safe Training, Inc.712-212-4145 www.railsafetraining.com

EmploymentRecruiting

S.E Weinstein Company800-258-1701 www.seweinstein.com

SearchPath of Chicago815-261-4403, x100 www.searchpathofchicago.com

EngineeringDesign/Build



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Process Design

ADF Engineering Inc.937-847-2700 adfengineering.com


Process Design-Cellulose

Equipment & ServicesAnalytical Instruments

Perten Instruments, Inc.801-936-8165 www.perten.com

Biogas Scrubbers

Eco-Tec, Inc.905-427-0077 www.eco-tec.com

Blowers & Fans

FlaktWoods716-845-0900 www.fl aktwoods.com

Centrifuges

Aaron Equipment630-350-2200 www.aaronequipment.com

Control Systems


Kahler Automation Corp.507-235-6648 www.kahlerautomation.com

Conveyors–Drag

Intersystems800-228-1483 www.intersystems.net

Conveyors–Mechanical

Superior Industries320-589-2406 www.superior-ind.com

Cooling Towers

Delta Cooling Towers, Inc.800-BUY-DELTA www.deltacooling.com

Corn Oil Recovery


DDGS Diesel

Total-Yield Diesel from Distillers402-640-8925 www.total-yield.com

Distillation Equipment

SRS Engineering Corpration951-526-2239 www.srsbiodiesel.com

Dryers-Fluid Bed

Buhler Aeroglide919-851-2000 www.aeroglide.com

Dryers-Rotary Drum


Dryers-Rotary Steam Tube


Quality Kiln and Dryer Inc318-335-2001 www.qualitykilnanddryer.com

Fermentors

WINBCO Tank Company641-683-1855 www.winbco.com

Filtration Equipment

Fluid Engineering814-453-5014 www.fl uideng.com

Fractionation-Corn

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

Cereal Process Technologies217-779-2595 www.cerealprocess.com


Grain Handling & Storage


Instrumentation


Insulator

Miller Insulation Co., INC701-297-8813 www.millerinsulation.com

Laboratory-Equipment


Laboratory-Testing Services

Midwest Laboratories, Inc.402-829-9877 www.midwestlabs.com

Loading Equipment

Determan Brownie, Inc.800-835-6074 www.determan.com

Maintenance Software


Industrial Services


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Millwright


Moisture Analyzers


Molecular Sieves

Grace Davison Renewable Technologies410-531-8731 www.gracebiofuels.com


Parts & Services


Process Control


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Pumps

PeopleFlo Manufacturing847-929-4774 www.peoplefl o.com

QA Test Products


Structural Fabrication


Tanks


ATEC Steel620-856-3488 www.atecsteel.com

Spokane Industries Inc.509-921-8868 www.spokanemetalproducts.com

Thermal Oxidizers

Wastewater Treatment Services

ADI Systems Inc.1-506-452-7307 www.adisystemsinc.com



Water Treatment

H2O INNOVATION763-566-8961 www.H2OINNOVATION.com

FinanceAppraisals

Natwick Associates Appraisal Services800-279-4757 www.natwick.com

Due Diligence


Insurance

ERI Solutions, Inc.316-927-4294 erisolutions.com

Mergers & Acquisitions

Moglia Advisors847-884-8282 www.mogliaadvisors.com

Legal ServicesAttorneys

WOHLSIFER & ASSOCIATES, P.A.850-219-8888 www.wohlsifer.com

MarketingFuel Ethanol

CHS Renewable Fuels651-355-6271 www.chsinc.com

Market Data

Miscellaneous

Maas Companies507-424-2640 www.maascompanies.com

Research & DevelopmentEngine Testing

Roush Industries734-779-7736 www.roush.com



EPM MARKETPLACE

[email protected]

PROVENRELIABILITYfor VOC, CO & PM

ABATEMENT

EISENMANN CorporationCrystal Lake, Illinois

Industrial Safety


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TransportationMarine

Odin Marine, Inc.203-969-3400 www.odingroup.com

Rail

Ameritrack RailRoad Contractors, Inc.765-659-2111 www.ameritrackrailroad.com

Rail Consulting

Rail Safe Training, Inc.712-212-4145 www.railsafetraining.com

Railcar Gate Openers

The Arnold Company800-245-7505 www.arnoldcompany.com



EPM MARKETPLACE

Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass. Collectively, these biomass utilization industries are positioned to replace nearly every product made from fossil fuels with those derived from plant or waste material. The publication covers a wide array of issues on the leading edge of biomass utilization technologies, from biorefining, dedicated energy crops and cellulosic ethanol to decentralized power, anaerobic digestion and gasification. It’s all here.

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For additional informationplease contact us at (701) 746-8385 or at [email protected].

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THANK YOU2010Exhibiting CompaniesTA&B Process SystemsAaron Equipment Company, Inc.Absolute Power and Communications, Inc.ADF Engineering Inc.ADI Systems IncAGRA Industries IncAgri-Systems dba ASI IndustrialAIAT Anstalt - Andritz Separation - Ondeo ISAir Resource Specialists, Inc.Alberici ConstructorsAlfa Laval, Inc.Allied Locke IndustriesAlloy Consulting & Equipment, Inc.AMECAmerican Coalition for EthanolAmerican Process Systems Member Eirich GroupAmerican Tank & Vessel, Inc.American YeastAMG, Inc.Anderson Chemical Co.Andy J. Egan Co.Angel Yeast Co., LtdAnhydro Inc.ANTIOCH International, Inc.Anton Paar USAApache Stainless Equipment CorporationAPECS, Inc.Applied Process Technology International, LLC ( APTI )Applikon Biotechnology, Inc.Aqua Power Inc.Arisdyne SystemsAshland Hercules Water TechnologiesAT&F Advanced Metals LLCATEC Steel Fabrication and Construction, LLCBBI InternationalBinMaster Level ControlsBioFuels AutomationBiofuels BusinessBiofuels InternationalBioFuels Journal MagazineBiomass Products & TechnologyBiothaneBliss Industries, LLCBlue Ribbon Corp.Boerger, LLCBoulay, Heutmaker, Zibell & Co. PLLPBrown Tank LLCBuckmanBuhler Inc.Burns & McDonnellBWF America Inc.Canadian Renewable Fuels AssociationCECO Environmental Corp.CEDA & Catalyst ServicesCenter Oil CompanyCenterPoint Energy Services, Inc.Centrisys CorpCereal Process TechnologiesCH2M HILLChemTreat, Inc.Christianson & Associates, PLLPCHS Renewable Fuels MarketingClifton Gunderson LLPCloud -Sellers Cleaning Systems

CompuWeigh CorporationConsulate General of Brazil in ChicagoConveyor Eng. & Mfg.Cooling Technology InstituteCooling Tower Depot, Inc.CPM Roskamp ChampionCRANE Energy Flow SolutionsCrown Iron Works CompanyDasco Inc.Davenport DryerDecanter Machine, Inc.Determan Brownie, Inc.Dionex CorporationDuPontEasy Energy Systems, Inc.EcoEngineersEdeniQEisenmannEncore Business SolutionsENTRIX, Inc.EnviroLogix Inc.Ethanol Analytical Solutions (EAS)ETS LaboratoriesExperTune, Inc.Extrel CMSFagen Inc.FCStoneFeedForward, Inc.Ferm SolutionsFermentis - Division of Lesaffre Yeast Corp.FlaktWoodsFlottweg Separation Technology, Inc.Fluid Engineering/TM FiltrationFluid-Quip, Inc.FM GlobalFoss North AmericaFreez-it-CleenFremont IndustriesFWS Group of CompaniesG.S. Robins & CompanyGamajet Cleaning Systems, Inc. GE Healthcare Life SciencesGE Water & Process TechnologiesGEA Barr-RosinGEA Westfalia Separator, Inc. Genencor A Danisco DivisionGenesis IIIGrace DavisonGreenShift CorporationGrowth EnergyH2O Innovation, Inc.Harris Group Inc.Hengye USAHogenson ConstructionHPDHydro-Klean, Inc.Hydro-ThermalICM, Inc.Inbicon Biomass RefineryIndeck Power Equipment CompanyIndustrial Construction and EngineeringIndustrial Scientific CorporationInnospec Fuel SpecialtiesInspectorate America Corp.Interra Global CorporationIntertek Oil, Chemical & AgriInvensys - Foxboro

Jacobs CorporationJamestown/Stutsman Development CorporationJohn Crane Inc.John Zink Co. LLCJordan Technologies IncKahler Automation Corp.KBRKennedy and Coe, LLCKice Industries, Inc.Koppers Inc.Laidig Systems, Inc.LAI-PRO, LLCLallemand Ethanol TechnologyLarox CorporationLECO CorporationLOTUS Mixers Inc.M&W Contractors, Inc.Maas CompaniesMalcolm Pirnie, Inc.Marcus Construction CompanyMarket Activities LLCMartrex, Inc.Mason Mfg., Inc.McCormick Construction CompanyMcgyan BiodieselMECO Shaft Seals, div. Woodex Bearing CompanyMetrohm USAMETTLER TOLEDOMicadaMichael Best & Friedrich LLPMidland Scientific, Inc.Midwest LaboratoriesMidwest TowersMiller InsulationMist Chemical & Supply Co.Mitchell County, GeorgiaMonitor Tech CorporationMonsanto CompanyMVTL LaboratoriesNAFTCNalcoNational Corn to Ethanol Research CenterNational Railway Equipment Co.National Sorghum ProducersNeogen CorporationNorth American Bioproducts Corporation (NABC)Northwest Scientific, Inc.NovozymesOI AnalyticalOndeo ISOrival Water FiltersOrtman Ethanol Water ResourcesPace Analytical Services, Inc.Pavilion TechnologiesPeopleFlo Manufacturing, Inc.Perten Instruments, Inc.PhibroChem Ethanol Performance GroupPinnacle Engineering IncPioneer Hi-Bred International, Inc.Plant Maintenance ServicesPremium Plant Services, Inc.ProQuip, Inc.Protectoseal Company, TheQuality Technology International

R&R Contracting Inc.Rain for RentR-Biopharm, Inc.Renewable Fuels AssociationRenewal Service Inc.Resonant BioSciencesRich Connell AGRI-SEARCH, Inc.Roadway Worker TrainingRoeslein & Associates, IncRomer Labs Inc.RTP Environmental Associates, Inc.SafeRackSalof Refrigeration Co., Inc.Save Our SteamSchaefer Bio-Engineering, LLCScott Equipment CompanyScott Health & SafetySeneca CompaniesSentry Equipment CorpSGS North America, Inc.ShipXpressShuttlewagon, Inc.SiemensSpraying Systems Co.Stanley ConsultantsSukup Manufacturing Co.Sulzer Process PumpsSunOpta BioProcess Inc.TAPCO INCThe Arnold CompanyThe IMA Financial Group, Inc.The New York Blower CompanyThe Walling CompanyTotal Filtration ServicesTramco, IncTranSystemsTranter, Inc.Trident Automation, Inc.Trihydro CorporationU.S. Energy ServicesU.S. Tsubaki, Inc.Univar USA Inc.US Department of Energy Biomass ProgramUS Water ServicesUS EPA Environmental Protection AgencyUSDA/ARSVAA, LLC (Van Sickle, Allen)Valley Equipment CompanyVerenium CorporationVertical Software, Inc.VictaulicVictory Energy OperationsVogelbusch USA, Inc.W. Soule & CompanyWarrior MfgWatson-Marlow Pumps GroupWB Services/The AndersonsWCR IncorporatedWeaver Silos Westmor IndustriesWIKA Instrument CorporationWinbco Tank CompanyYSI Life SciencesZeochem LLC

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July 2010 Ethanol Producer Magazine

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Transcript of July 2010 Ethanol Producer Magazine