Construction Continues as Number of New Projects Dwindles

By Craig A. Johnson | June 17, 2008
very day, the mainstream media seems to report record-setting fuel prices at the pump. A few years ago, this trend would have been a boon to biodiesel producers, who could price their fuel competitively against petroleum diesel. Today, however, it's lost among concerns of increasing feedstock prices and financing challenges.

Between April 2007 and April 2008, the price of No. 2 diesel shot up 35 percent. Between April 2005 and April 2008, it increased 52 percent. Thankfully, the U.S. economy can be described as "load-bearing" in its capacity to effectively support these types of increases. "The problem is that people want an alternative fuel, and some will pay a premium, but ultimately the price has to be competitive with petro-diesel," said Terry McCullars, general manager of Arkansas Soy Energy Group LLC. His plant was originally designed to produce biodiesel from soy oil, but he expects the plant to shift to a blend of 80 percent animal fats and 20 percent soy oil when the facility comes on line in July.

In other biodiesel project news, Blue Ridge Biofuels, a 1 MMgy plant expanding to 2 MMgy in Asheville, N.C., closed its financing in May. To be more competitive, the plant intends to realize efficiencies via methanol recovery and high free-fatty-acid reactors, and form alliances with other biodiesel producers in the region.

Blue Ridge moves forward with its expansion at a time when few operating plants are producing at full capacity and new construction projects are rare. In July 2007, Biodiesel Magazine listed 51 biodiesel plants under construction or reaching completion. A year later, that figure has dwindled to 14, including three completed projects. The precipitous drop in biodiesel plant construction indicates that the industry has hit a plateau.

The three completed projects are: High Plains Bioenergy, a 30 MMgy facility in Guymon, Okla.; Nu-Energie LLC, a 10 MMgy plant in Phipps Bend, Tenn., which began production in February; and Perihelion Global Inc., a 60 MMgy facility in Opp, Ala., that is currently operating at a 12 MMgy capacity. According to John Beebe, Perihelion's chief executive officer, the company plans to increase capacity in several phases.
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