A Synergistic Pairing

Ethanol and biodiesel have more in common than just a geographical footprint. With corn oil, the industries are edging closer to a relationship that could aid both as feedstock prices rise.
By Dave Nilles | July 14, 2008
America's primary renewable transportation fuel industries-ethanol and biodiesel-have followed a somewhat similar growth pattern. Both had meager beginnings before growing gradually through farmer investment and government policy. Both also share a similar footprint as many biodiesel plants are in the Corn Belt. Now both are negatively affected by high feedstock costs, and they're looking to each other for a solution.

Using corn oil from the ethanol industry to produce biodiesel seems like a logical connection. Typical yellow dent corn contains 4 percent to 4.3 percent oil on a dry-weight basis.

Ethanol producers could extract the oil, which could then be pretreated and turned into biodiesel. The concept is quickly moving from the drawing board to the field.

VeraSun Energy Corp., one of the nation's largest ethanol producers with more than 1 billion gallons of annual capacity, is on the leading edge of the ethanol industry's efforts to provide corn oil to biodiesel producers. In April, the company held a ceremonial groundbreaking for an oil-extraction facility at its Aurora, S.D., plant. The Aurora plant's oil-extraction facility is under construction and start-up is anticipated in the fourth quarter of 2008. "The exciting thing is, you're able to generate two renewable fuels from one kernel of corn," says Keith Bruinsma, VeraSun's vice president of corporate development.

VeraSun intends to implement the technology at two additional plants. Bruinsma says they've applied for permits in Iowa for 100 MMgy plants in Fort Dodge and Charles City. At press time, neither project had a definite timeline. "We're evaluating those two locations," Bruinsma says.

It should be noted that VeraSun isn't the only ethanol plant considering or implementing corn oil extraction, and Crown Iron Works Co., which is providing the Aurora plant's technology, isn't the only company offering extraction technology. However, the two are pairing on the largest project to extract corn oil from distillers grains. The Aurora site is becoming a site of firsts-it was the first 100 MMgy new-generation dry-grind plant when it opened in 2003. Now it's becoming the largest plant to extract corn oil from its distillers grains. It appears to be part of a growing trend in the industry.

VeraSun began looking at corn-oil extraction technology in late 2004, when corn was $2 per bushel and ethanol and distillers grains were profitable end products. Now corn prices have risen and many producers are looking at widening their product line. "[Corn-oil extraction] adds another revenue stream to the bottom line," Bruinsma says.

Minneapolis-based Crown Iron Works is providing the equipment, which utilizes hexane-based solvent extraction. The equipment will be housed in an enclosed building in an approximately 80- by 120-foot area outside the plant's fence line. The distillers grains goes through the dryer in the ethanol plant and is transported via conveyor to the extraction site. The facility also includes on-site storage for corn oil.

The Aurora plant site had plenty of room for the facility, Bruinsma says. The facility was already undergoing approval for a separate improvement project, so permitting went smoothly.

End-Use Options
VeraSun has attracted a great deal of interest from biodiesel producers for its corn oil, although an offtake agreement wasn't finalized at press time, Bruinsma says. Alan Weber, vice president and founder of biodiesel consulting company MARC-IV LLC, says the more feedstock that's available on the market, regardless of its end use, will result in lower prices for biodiesel producers. Although VeraSun is targeting the biodiesel industry, some producers may aim for industrial or food-grade users, especially if the corn oil is removed from the plant's front end.

Renewable Energy Group Inc. is taking the steps necessary to convert crude corn oil into biodiesel. The Ames, Iowa-based company builds and manages a network of commercial-scale biodiesel facilities. Using crude corn oil was a natural progression for REG, which is the nation's largest biodiesel marketer. "Well over two years ago we started to see that it was obvious soybean oil supplies were going to get stressed and probably go beyond what they could supply us," says David Elsenbast, REG's vice president of procurement.
REG has been using corn oil from ethanol production for more than 18 months, says Brad Albin, REG's vice president of manufacturing. Currently three plants in the company's network are capable of using the feedstock. Albin says they have 90 MMgy to 130 MMgy of capacity available to process corn oil.

VeraSun's Aurora plant produces 380,000 tons of distillers dried grains per year, enough to produce an estimated 8 MMgy to 9 MMgy of corn oil, leaving 360,000 tons of what the company calls corn distillers meal. Bruinsma says the meal holds nutritional values that may allow it to be fed at higher inclusion rates than distillers dried grains in some diets. Research is being conducted to determine its full feed value. "We are utilizing four different Midwest-based universities doing studies," Bruinsma says.

It's obvious that even one company's capacity, such as VeraSun, offers great potential for biodiesel producers, and it's likely the industry will continue to evaluate the break-even prices of crude corn oil. Interest is clearly growing.

Feedstock Variation
Distillers grains from ethanol plants may vary from plant to plant and even from within the same plant, depending on the production process. A similar effect occurs when corn oil is extracted from the back end of a plant. "Corn oil quality is variable, just like it is with all feedstocks," Albin says.

Feedstock variability creates processing problems for biodiesel producers, and the challenges with corn oil also vary on how it's extracted. All feedstocks come with their own opportunities. Whether from a front-end or back-end process, corn oil has issues, Albin says. "If you don't pretreat it correctly, it won't meet current ASTM specs," he says.

Albin says corn oil is priced at or a little more than animal fats. However, pretreatment costs are higher because the corn oil has to be cleaned up. The key concerns with corn oil are its insoluble content, moisture, free fatty acids, sterols and waxes. "It's not a soy only plant, animal fat only business," Elsenbast says. "We feel that the answers to biodiesel feedstock needs are dealing with a lot of different feedstocks. When we develop technologies for biodiesel plants, we engineer pretreatment capabilities that allow us to use corn oil and to deal with high levels of FFAs and other challenges."

The efficiencies of de-germing corn or de-oiling distillers grains also vary. Some reports tag the range of available corn oil from 0.5 to 1.5 pounds per bushel. Using 1 pound as a benchmark, the ethanol industry has the capacity to produce more corn oil than the amount of fuel the entire biodiesel industry produced in 2007. That influx of feedstock would be welcomed in the biodiesel industry, which has been suffering from historically high soybean oil prices the past few years.

Oil removed from the front end of the ethanol process can make food-grade standards, but the process is capital intensive. Back-end extraction typically removes the oil via centrifuge and provides less oil than front-end de-germing. "With greater than 8 billion gallons worth of ethanol production, there is around 800 million gallons of corn oil locked up in the process," Albin says.

As VeraSun and other plants begin to implement the technology, its synergistic nature appears to be a blessing for both industries. Albin predicts that the few plants implementing corn oil extraction technology are only the beginning. It's only a matter of time and choosing which company's technology works best. "Between now and the first portion of '09, that curve will be unbelievable," he says. "It's hard to talk with anyone who isn't in the process of making a selection."

2004 U.S. Vegetable Oil Production

SOURCE: BUREAU OF THE CENSUS AND AGRICULTURAL MARKETING SERVICE


Dave Nilles is contributions editor for Biodiesel Magazine. Reach him at dnilles@bbibiofuels.com or (701) 373-0636.
 
 
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