Feedstock Considers for Future U.S. Producers

Multiple factors influence biodiesel feedstock choices for American producers. From virgin soybean oil to recycled restaurant grease, price, availability and quality are vital-and continuous-assessments. Over the longterm, multiple feedstock production might prove to be the safest route for U.S. producers.
By Robert L. Stroup | January 28, 2004
On a rudimentary level, biodiesel production is not a highly complex process. Given a bottle of 200-proof alcohol, cooking oil left over from deep-frying the holiday turkey and a small amount of Drano, a person with only basic knowledge of organic chemistry could mix up a rough batch of fatty acid methyl ester.

However, it would be a waste of good whiskey and the product certainly would not meet the specifications set forth by the American Society for Testing and Materials (ASTM).

Rather, biodiesel production should begin with the guidance of a reputable process-design firm, along with a professional assessment of available production feedstocks-based on price, availability and quality. Of course, the feedstock used for biodiesel production is "fat" derived from vegetable or animal sources. Natural oils and fats are triglycerides-esters of glycerin-and three molecules of fatty acids. From triglycerides, biodiesel is produced in a process called transesterification, during which oil or fat is reacted with an alcohol-usually methanol-in the presence of a base catalyst, such as sodium hydroxide.

Transesterification yields two products: fatty acid methyl ester (FAME), and glycerin.

FAME is biodiesel, and it can be labeled as such, and sold as fuel, if it meets ASTM standards. Note: Crude, de-gummed soybean oil will burn in diesel engines, but such oil is not considered biodiesel, nor would it meet ASTM standards, and it could damage or foul the engine. To become biodiesel, the lipid, or fat, must first be chemically changed into a methyl ester.

Feedstock sources
Although biodiesel can be produced from any triglyceride, the popular fats and oils most commonly used worldwide are:

The predominant feedstock used in the United States is soybean oil. Other vegetable oils, such as corn, cottonseed, canola (rape seed), flax, sunflower and peanut, also can be used. These seed oils generally are more expensive than soybean oil. However, on several days in October 2003, the cash price of soybean oil did exceed that of corn oil.

Animal-derived products such as tallow, choice white grease (lard), poultry fat and yellow grease are also triglycerides and are used as a biodiesel feedstock. These products, when compared to plant-derived oils, often offer an economical advantage as a feedstock. There is also some indication that these sources, which are high in saturated fats, produce less nitrous oxides compared to plant oils. However, this research is ongoing.

The third main source of triglycerides is recycled oil and grease, usually from restaurants and food processing plants. Although more pre-treatment is required for this feedstock compared to virgin vegetable oils, economically it can be a very attractive feedstock. The use of a recycled product such as used cooking oil is an environmentally friendly process since it solves a waste disposal problem.

On October 30, the U.S. Navy announced a project in which it will produce biodiesel from used cooking oils at Naval Base Ventura County (NBVC) in Port Hueneme, Calif. (see article on page 20). Animal-derived feedstock and recycled cooking oils are readily available from 200-plus renderers in the United States, including such companies as Griffin Industries, Darling, Wintzer, Georgia Protein, National By-Products, Moyer Packing, etc.

Production from soybeans
The main sources of soybean-derived biodiesel feedstocks are:

1. Solvent extraction plants that process 2,000 to 5,000 tons of soybeans per day. These plants are set up to meet both domestic and export markets for protein meal and soybean oil. Most soybean meal for export is shipped from extraction plants with good access to the Port of New Orleans via the Mississippi River and its tributaries. Many large extraction plants also incorporate a refinery operation or have reasonable transportation to a refinery at another site.

2. Mechanical extraction plants set up primarily to produce expeller-type meal, which has bypass protein advantages for ruminating animals. These plants usually are set up to process 24 to 800 tons of soybeans per day. Most small plants do not have in-house refineries. Several new mechanical plants that have been constructed during the past several years do have their own refineries that produce specialty oils. One of the largest mechanical extraction plants in the United States is West Central Cooperative in Ralston, Iowa. In addition to being the largest U.S. producer of bypass protein meal, it is the largest producer of biodiesel in the nation.

The following factors have contributed to the use of soybean oil as the dominant biodiesel feedstock in the United States:
-Soybean oil is readily available in many regions of the country.
-The composition of soybean oil is a relative constant, compared to by-products of food preparation, particularly recycled restaurant grease.
-Historically, soybean oil is less expensive than other vegetable oils.
-There is a high domestic production of soybean oil, compared with other vegetable oils and animal fats. Soybean oil represents almost 60 percent of the total fats and oils produced in the United States.
-Many subsidies and grants in the past have been based on vegetable oils, although most of the new governmental programs are feedstock neutral.
-National soybean associations have done an effective job in promoting the product.

It should be noted that any consideration of biodiesel feedstock supply should include soybean oil, since most of the biodiesel currently produced in the United States uses soybean oil as the feedstock.

A potential biodiesel producer should also be aware of the changes during the past four to five years in the "soybean complex." The soybean complex is the global relationship between the various factors influencing the price of soybeans, soybean meal and soybean oil including supply, transportation, demand, alternate protein and oil sources, animal production and, sometimes, political considerations.

For a better understanding of the dynamics of supply, consumption and prices of whole soybeans and soybean products, the following tables show the changes in the soybean complex domestically and internationally since October 1999. These tables include the latest USDA forecasts for the new marketing year that began October 1, 2003, and ends September 30, 2004.

The influence of China
The most significant influence on the U. S. soybean crushing business since 1995 has been the changes in the import mix of our largest single customer, China. China has changed from being an importer of soybean meal to an importer of whole soybeans. China is now the largest single soybean customer of the United States, with exports expected to reach 7.7 million metric tons in 2002-03.

Brazil is expected to rival the United States' market position in China with exports of 7.4 million tons during this past year. Chinese import mix, mainly from the "big three" Soybean Producers-United States, Brazil and Argentina-has changed dramatically from 1995-96 through 2002-03.

Astonishingly, whole soybean imports by China increased 25-fold between 1995 and 2003. In contrast, soybean meal imports dropped to zero.
Why did this happen?
By 2001-02, China had sufficient crush capacity to export over one million metric tons of soybean meal. Chinese soybean imports hit a record high of 20.3 million tons in 2002-03, nearly doubling the 2001-02 level of 10.4 million tons. This figure is even more remarkable when compared to the 1995-96 level of 800,000 tons.

The Chinese market has changed because several dozen new crush plants have been built in China since 1995, giving China sufficient crush capacity to produce enough protein meal to meet its domestic demand. This more than offsets the previous importation of soybean meal, mainly from the United States.

U.S. crush capacity increased As a result of what's happened with China, numerous U.S. soybean-crushing plants located on the Ohio and Mississippi Rivers have experienced reduced meal demand. Several plants have been shut down, leading some people to conclude that U.S. crush capacity has been reduced. However, crush capacity has actually increased with the construction of several new large solvent extraction plants in Iowa, Minnesota and South Dakota.

In addition, several new small-capacity mechanical screw or expeller press plants were built on the East Coast and in the Midwest between 1997 and 2003. This is not surprising, since domestic demand for soybean meal continued to increase between 1996 and 2001, driven by U.S. meat production, which increased 8.5 percent during the same period.

Soybean production low, prices highFor the short term, it appears there will continue to be upward pressure on prices of soybean products based on the USDA forecast for the crop year 2003-04.

The USDA forecasts that the crush will drop to 1.510 million bushels (41.1 million metric tons) and soybean oil production for 2003-04 will drop to 17.02 billion pounds (7.72 million metric tons). Ending stocks of soybean oil by the end of September 2003 are estimated to be only 710,000 metric tons and are forecasted to drop to 550,000 metric tons by October 2004.

The changes in the soybean complex, along with drought in Indiana and Ohio in 2002 (which affected ending soybean stocks in 2002), and drought in the other parts of the Midwest and upper Midwest during August 2003, resulted in very high price levels. Cash prices, as of October 22, 2003, compared to the same period in 2002 were:

This is a huge market shift since February 2001, when soybean oil (at Decatur, Ill. prices) was $0.124 per pound.

For the near term, it appears that the October USDA forecast for soybean production for 2003-04 of 2.468 billion bushels (67.18 million metric tons) will result in the lowest soybean supplies since 1996-97. This has resulted in a lower crush for October 2003, mainly due to higher meal prices and the use of alternative protein sources. Because of this, there will be a reduced supply of soybean oil. This near term shortage of vegetable oil will be partially offset by increased imports of canola oil from Canada.

You can be assured that market prices will change, up or down. The consumption of soybean oil for biodiesel feedstock at present is only a minor influence on the price. At a projected production of 25 million gallons of biodiesel for 2003, 17 million bushels of soybeans could provide the necessary feedstock (based on solvent extraction) assuming a biodiesel yield of 1.4 gallons per bushel.

Other biodiesel market drivers such as the Energy Policy Act, possible passage of the 2003 energy bill and various environmental programs-for school buses, marinas, ski lifts, etc.-will continue to influence biodiesel consumption. However, the big looming potential for biodiesel is the use of biodiesel blends for transportation fuel. If the EPA mandate to reduce sulphur in transportation diesel fuel from 500 parts per million (ppm) to 15 ppm in 2006 remains on schedule, a new influence on soybean demand could come into play.

The proposed reduction in sulphur will cause lubricity problems in the diesel fuel injection system. Adding 1 percent to 3 percent biodiesel to the petroleum diesel can restore the lubricant qualities of the fuel. Based on approximately 35 billion gallons of diesel fuel used in over-the-road transportation, this addition, using a B2 blend, would require 700 million gallons of biodiesel just for this program. This represents 500 million bushels of soybeans (based on 1.4 gallons/bushel) or about 20 percent of a 2.468 billion bushel crop, which is the 2003-04 forecast.

Of course, this assumes that biodiesel remains the additive of choice for diesel fuel and that 100 percent of the feedstocks for this potential market come from soybeans.

This will not happen.

Market forces will dictate that other feedstocks will be needed to supplement soybean oil.

Animal-derived feedstock sources
One logical substitute for a portion of the soybean oil used for biodiesel feedstock is animal-derived sources and recycled restaurant grease or oil. In some regions of the country, other vegetable oils can be considered.

Based on information published by Dr. Gary Pearl, president of the Fats and Proteins Research Foundation (FPRF), the United States produces over 11 billion pounds of animal fats and recycled cooking oils, which account for over 30 percent of the total U.S. fats and oil production.

A 1998 study by Appel Consultants reported that there are about 1.4 restaurants in the United States per 1000 people. It is estimated by FPRF that the amount of recycled cooking oils and fats (yellow grease) from the restaurant and food service industry exceeds 2.75 billion pounds. This supply of triglycerides should continue to increase as the restaurant industry grows.

The message: A well-planned biodiesel facility should be designed to handle not only soybean oil, but multiple feedstocks, including locally available vegetable oils, fats from animal sources, and yellow and brown grease from restaurants. For example, although there are additional processing costs associated with yellow grease, the current cash price of 14 cents to 16 cents per pound (depending on location) makes it an attractive alternative.

Vegetable oil soapstock provides option
Another potential feedstock is vegetable oil soapstock, an inexpensive coproduct of vegetable oil refining with a typical dry matter price 20 percent to 25 percent more than that of soy oil. An esterification process that utilizes soapstock has been developed at the USDA's Eastern Regional Research Center (ERRC). The method used for FAME synthesis from soapstock involves these steps:
-Hydrolysis of all fatty acyl ester bonds by saponification.
-Removal of water via standard industrial methods used to prepare an acid oil, a current product used in the animal feed industry.
-Acid-catalyzed esterification of the resulting free fatty acids.

While the above description seems complicated, the process is simple and efficient, and can operate at ambient pressure and relatively low temperature in simple equipment. This process appears to have promise, particularly if the market spread between soybean oil and products such as recycled grease continues to increase.

Processing considerationsAll biodiesel feedstocks, including soybean oil, require some amount of pre-conditioning, often chemical refining, before being processed into biodiesel. For example, crude soybean oil must be degummed to remove sources of phosphorous, which degrades the catalysts employed in biodiesel production.

Free fatty acids should also be removed from the feedstock before transesterification, especially if recycled cooking oils, which are high in free fatty acids due to their exposure to high temperature during frying, are used. Free fatty acids are corrosive, and therefore hard on fuel storage facilities, fuel systems and engines. ASTM standards set forth tight tolerances on the allowable levels of free fatty acids in biodiesel.

A common approach for removing free fatty acids from the feedstock is via acid catalyzed esterification in the presence of methanol. This converts the free fatty acids to methyl esters (e.g., biodiesel). Acid esterification equipment requires the use of stainless steel equipment due to the corrosive nature of the process.

Crude oil from a crushing operation also may be pre-treated by caustic refining to remove free fatty acid. The soapstocks generated in this step are then removed by washing the oil with hot water. The oil must be dried to remove the water before transesterification, since water inhibits the biodiesel-producing reaction. In at least one large biodiesel plant, the feedstock is RBD soybean oil (refined, bleached and deodorized).

As mentioned previously, soybean oil or other virgin vegetable oils are reasonably consistent. The feedstock used today will be approximately the same as the feedstock tomorrow. This usually is not the case when using recycled oil. Recycled oil requires accurate chemical analysis to determine what pretreatment may be required.

Used cooking oil may also contain sulphur compounds, often the result of frying sulphur-bearing foods such as onions. There are several proven methods to strip out any unwanted sulphur compounds during pretreatment.

Obtaining used cooking oil for use as a biodiesel feedstock involves more than just driving up to your local McDonalds and filling a tank truck. The recycling process includes not only the pickup of the cooking oil, but also the proper removal of food particles and other physical contaminants. In addition, used cooking oil contains water, and the oil must be dried. An experienced rendering company is in the best position to do these pre-process steps and then deliver a cleaned and dried recycled product to the biodiesel plant.

The use of feedstocks other than soybean oil may involve extra processing steps and more equipment. But to be financially successful, a biodiesel plant needs to be prepared to process multiple feedstocks based on regional availability, market prices and processing costs.

When processing multiple feedstocks, consideration should be given to using a blended feedstock. Instead of processing feedstock "A" for a few days and then switching to feedstock "B" for another period of time, various feedstocks can be pretreated and temporarily stored in separate agitated storage for final blending prior to transesterification. In this way, feedstocks can be analyzed and monitored, yielding a final blend that will be more consistent and result in a more efficient and controlled process.

In conclusion, remember that the goal is to produce biodiesel that will help reduce America's dependence on imported oil, and at the same help the environment. To accomplish this, the primary cost of biodiesel production-the feedstock-must be carefully considered. Over the long term, economics will dictate that the use of multiple feedstocks will be a significant factor in the development of a successful alternate fuel business.

Bob Stroup, president of Ohio-based R.L. Stroup Co. LTD, is an oilseed and biofuels consultant. He can be reached by e-mail at rlstroupco@earthlink.net
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