Resurgence in the biodiesel industry and its demand for inedible corn oil extracted from ethanol plants was a topic of great discussion at the Fuel Ethanol Workshop & Expo last week in Indianapolis. Several experts addressed corn-oil-to-biodiesel opportunities, concerns and technological approaches.

Despite ongoing patent infringement litigation, Greenshift Corp.’s Chief Technology Officer David Winsness shared the stage with Brock Beach, capital sales manager for oil separation solutions for ICM Inc., one of several litigants in the lawsuit, where the two answered audience questions about their companies’ differing oil extraction methods.

“I believe we have the pioneering patent on the extraction process,” Winsness said. “We don’t use a tricanter, we use a disc stack centrifuge. There’s more G-force there [while using less] horsepower.” Beach responded, saying that ICM uses a tricanter made by Flottweg, another litigant in the patent infringement case, because “tricanters are designed for heavy solids,” and the material will ultimately “spend less time in a tricanter” than in a disc stack centrifuge. On the unit’s power, Beach said, “We don’t see the need for more G-force.”

Winsness said at 30 cents a pound, extracting a half pound a bushel, a 110 MMgy ethanol plant that processes 20 million bushels can add $6 million to its bottom line. The capital costs for extracting a half-pound per bushel is about $500,000, Winsness said, adding there’s a one-year return on that investment.

He acknowledged that removing too much oil from distillers grains can have negative impacts on the quality of the feed supplement and its going rate. “If you keep taking out the fat, it will impact the feed,” he said, adding to keep the protein-to-fat ratio in mind. “For every 3 percent of the oil you remove, you increase the protein by 1 percent.”

Joe Riley, general manager of FEC Solutions, said there should be a premium for high-fat distillers grains, so if the demand for inedible corn oil from the biodiesel industry goes away, the markets won’t crash and ethanol producers will still be able to retain some of that value. “Today there’s not much price difference” between high-fat and deoiled DDGS, Riley said. Soybean meal goes for $330 a ton and “we should shoot for that,” he said, admitting, “Yes, the amino acid profile is different.”

“Find diverse homes for your oil,” Riley said. “The last thing you want to do is have a load of corn oil come back into your plant.” He said the low-hanging fruit at an ethanol plant is still from beer column on, and that the next-generation of corn oil extraction will need to focus on oil quality, quantity and, finally, maximizing DDGS quality.

Riley was asked by an audience member if the oil extracted from the backend of ethanol plants is “good enough for the biodiesel industry.” He responded, “There are a number of different biodiesel technologies out there” to handle the material. “Good enough is difficult to say.”

Biodiesel producers found the oil to be “good enough” to make up slightly less than 10 percent of the U.S. feedstock supply in 2010, according to Dave Elsenbast, vice president of supply chain management for Renewable Energy Group Inc. The National Biodiesel Board reports only 315 million gallons of biodiesel was produced in the U.S. last year, so roughly 31 million gallons of U.S. biodiesel manufactured in 2012 were derived from corn oil. He said about 35 percent of U.S. ethanol plants implement corn oil extraction, adding that he expects that number to double within a couple of years.

While use of 31 million gallons of corn oil for biodiesel production is encouraging, Winsness said the U.S. EPA projects 680 million gallons of corn oil will be needed to meet the RFS2’s biomass-based diesel targets. He mentioned the 2011 diesel requirement of 800 million gallons, next year’s 1 billion gallon mandate, and EPA’s proposed volume for 2013, 1.28 billion gallons. “We’ve got 500 million gallons to make up in 3 years,” Winsness said.

Talk of co-locating biodiesel processing units onsite of ethanol plants has been around since these oil extraction technologies emerged, but the model of selling the oil to offsite users through marketers has predominated the scene. Now Winsness says he thinks a number of ethanol companies will finally come around to processing their corn oil into biodiesel onsite.

One big reason is because, as he said, “There’s plenty of opportunity to sell 100 percent of the biodiesel locally,” unlike ethanol, which is sold, transported, blended and anonymously integrated into on-road transportation fuel supplies. With biodiesel, the combined on- and off-road local demand would soak up locally available biodiesel with ease. He said Greenshift has a pending patent application for a blender pump so ethanol producers with biodiesel manufacturing onsite could maximize sales of biodiesel locally, and with the high price of biomass-based diesel RINs and the $1 per gallon federal blenders tax credit in play, they can pass the higher blend savings to the customer locally. “The first movers have the advantage here,” he said.

Co-locating biodiesel production onsite of an ethanol plant would work well with Biodiesel Experts International LLC’s new approach to enzymatic biodiesel production. Ernie DeMartino, president and CEO, said his company is working with Israel-based TransBiodiesel to commercialize enzymatic biodiesel production. He said the enzymes they use prefer ethanol over methanol for transesterification of triglycerides, and the new approach to biodiesel production would integrate well at an ethanol plant.