Let B2 Begin

Minnesota's long-awaited 2 percent biodiesel requirement has finally taken effect. Key stakeholders are weighing in on the implications of the state's groundbreaking use and acceptance of biodiesel.
By Dave Nilles | October 01, 2005
The average Minnesota diesel fuel user likely didn't notice much difference in their fuel on Sept. 29. At least that was the biodiesel industry's hope leading up to the state's highly anticipated switch to B2 biodiesel blends.

Minnesota again set the standard for renewable fuel usage by passing a law in 2002 requiring B2 in all on-road diesel fuels. The law finally came to fruition in late September after the required 8 mmgy of in-state biodiesel production was certified by the state's Department of Agriculture. The B2 switch was expected to go smoothly leading up to the date of implementation.

With three biodiesel plants supplying more than enough product to meet the state's 16 mmgy demand for biodiesel, the industry is hoping that B2 is just the beginning for the state. The recent run-up in energy prices has, in some markets, caused retail biodiesel costs to be cheaper than that of petroleum diesel fuel.

"Mandate or no mandate, biodiesel works right now," said Tom Kersting of Minnesota Soybean Processors. His plant, located in Brewster, Minn., came on line in late August and is ramping up to full production. SoyMor, a Renewable Energy Group-designed facility, is producing triple the capacity needed to spur the state's biodiesel mandate. FUMPA Biofuels was the state's first commercial-scale biodiesel producer.
Producers and other stakeholders in the B2 requirement are weighing in on what it means to the state, the industry and the future of biodiesel.

Enforcing the requirement
The Minnesota Department of Commerce's Weights and Measures Division is charged with enforcing the 2 percent biodiesel blend, as with all other petroleum specifications within the state. According to Director Carol Hockert, the biodiesel blend is essentially "just another specification" that must be tested.

Hockert said her division didn't have to change its procedures much to prepare for the mandate. However, it did spend three years developing a test method for the blend. "With a 2 percent, total you can't have an uncertainty of 1 percent to 2 percent," Hockert said. "We had to have the repeatability of the test down to 0.2 percent-small enough so that we can measure it."

Jim Hedman led the division's efforts to develop the B2 test. "We were working with an unknown," he said. "We've got some equipment available that might be applicable. That's the place to start, and it worked out."

Eighteen inspectors will be testing fuel statewide with equipment based on a Fourier transform infrared spectrometer. However, initial enforcement will rely heavily on auditing bills of lading, according to Hedman.

Hockert said fuel samples would be collected at the point of sale, including either retail pumps or the fuel terminal before bulk deliveries are made to fleet users. Those selling the fuel are ultimately responsible for selling a legal product, Hockert said. "But if we test it and it fails, we check the bill of lading," she added. "If it says the product was B2, then we check up the supply chain."

Inspectors typically test terminals several times per year in order to avoid widespread testing failures. It appears the infrastructure is in place to avoid such issues. Hockert and Hedman toured the Magellan Mainstream Partners blending terminal in Alexandria, Minn., this summer and came away confident that proper blending procedures and equipment are in place.

"We, the Department of Agriculture and the industry realize that because we are on the forefront, if there are problems and issues that come up, people will see them," Hockert said.

Coming clean out of the gates
Perhaps the biggest concern with the B2 requirement's implementation is making sure it goes as smooth as possible. The incredible amount of work done in the months leading up to Sept. 29 was meant to avoid that. The Minnesota Biodiesel Task Force, formed in 2003, addressed many of those issues. Initiated by Gov. Tim Pawlenty, the nine-member group advised the state's Department of Agriculture on methods to increase biodiesel production and use in Minnesota.

Now the biggest concern may boil down to availability. Several officials have raised the possibility, however slight, that the southwest region of the state may have a difficult time supplying enough B2 to meet demand. Despite most of the state's biodiesel production occurring in the region, most of its diesel fuel comes from blending terminals located across the border in Iowa.

Several Iowa terminals haven't prepared for B2, according to Hockert. However, Ralph Groschen, marketing specialist with the Minnesota Department of Agriculture, estimates that 90 percent of Minnesota's in-state terminals are ready for B2. "Plans are being addressed to cover the southwest area of the state," he said.

Most other terminals importing B2 into Minnesota are set to meet the fuel requirements. CHS Inc., formerly Cenex Harvest States, has been providing biodiesel-blended diesel fuel to Minnesota consumers since the early 1990s, according to Darin Hunhoff, director of bulk distribution services at CHS.

"I don't think [the mandate] is going to affect us as a petroleum company as far as getting fuels into the marketplace," said Don Olson, CHS Inc.'s vice president of refined fuels. "We've been doing it for a number of years." Olson added that terminals investing in biodiesel-specific equipment actually aids his company. "This cleans up the logistics and effectiveness of getting the fuel into the marketplace," he said.

Olson was a member of the Minnesota Biodiesel Task Force and was quick to voice his concern about the initial lack of infrastructure to handle the mandate. However, CHS and other groups answered that call by putting in biodiesel-compatible storage and distribution systems. Magellan has implemented injection blending systems in terminals throughout Minnesota and North Dakota. CHS' terminal in McFarland, Wis., blended diesel up to B5 without any problems over the past year, according to Olson.

Drew Combs, CHS' director of supply and economics, said there are approximately 27 terminals within and outside Minnesota that supply fuel to the state. Approximately half of those have the infrastructure needed to blend B2 correctly according to Combs. The issue is whether the remaining terminals will construct biodiesel-blending equipment or if petroleum marketers who purchase diesel from these terminals will be forced choose to splash blend the product.

Making quality count
Considering Minnesota's harsh winters, tackling cold flow issues was an understandable priority for the task force (see "Keeping the Flow" on page 24 for more details on cold flow issues). Hedman said blending techniques require that neat biodiesel does not sit in blending equipment. Essentially, once biodiesel-blended diesel leaves the blending rack, there should be no concerns about cold flow issues. Once a homogenous blend has been established, the B2 should act identical to regular No. 2 diesel fuel. Terminals have solved those issues with heated tanks and lines.

The only potential problem Hedman said might occur could be due to biodiesel's solvent properties. "In a sense, it's kind of like the ethanol story all over again," he said. "Cars that never had a taste of ethanol were initially shifted to a 10 percent blend. Deposits that had formed in the storage tank could be loosened up. I don't think that's going to happen, but it is one potential problem."

Combs said CHS does have concerns about biodiesel feedstock. Tallow-based biodiesel is not as cold-flow advantageous as other feedstocks.

"There won't be any issues with B2," Hedman said. "I'm not speaking as a biodiesel promoter or advocate. My connection is that it is now a fuel specification. It's my job to enforce it."

Getting the information out
The Minnesota Biodiesel Task Force and National Biodiesel Board spent much of the past three years preparing biodiesel producers and blenders for the B2 requirement. The Minnesota chapter of the American Lung Association (ALA) spent much of the past summer preparing consumers and fuel station owners for the implementation. The volunteer group sent brochures to vehicle fleets, service stations and approximately 25,000 diesel vehicle owners throughout the state, according to Tim Gerlach, the state's ALA director for outdoor air programs. "The basic message was, 'This is coming, this is a great thing,'" he said. "'It's cleaner air and good for your vehicle.' We just tried to alleviate any concerns people had about 'What are they doing to our fuel?'"

The Minnesota Biodiesel Task Force's education duties aren't over either. The group will formally meet for another two years to ensure the transition goes smoothly.

Is B2 just the starting point?
The B2 mandate was originally proposed as a B5 blend, according to Groschen. However, it was scaled back to ensure its passage into law. With the physical properties between B2 and B5 being minimal, it begs the question: Will higher blends come next? After all, the Minnesota legislature passed a bill moving from 10 percent ethanol blends in gasoline to 20 percent blends.

B5 is well accepted by engine manufacturing companies, according to Groschen. "It looks pretty certain that it will meet specifications," he said. "It was demonstrated during testimony [for the B2 mandate] that B2 wouldn't have an effect on cold flow. B5 would probably fit into that parameter as well."

Gerlach said B2 might just be the beginning. "The simple fact is if you can get 2 percent now, all fleets starting to blend biodiesel could get B20," he said. "B2 came in, now you can get B20. E10 came in, now you can get E85."

This September marked the third full year since Hennepin County began using B5 blends in its 630-vehicle fleet. The fleet has encountered no problems and is budgeted to use 380,000 gallons of fuel next year.

Fleet Manager Mike Judkins told Biodiesel Magazine that other area fleet managers are expressing little reservation about the move to B2. "It should be a nonevent based on our experiences here," he said.

Most fuel blending terminals are constructing equipment capable of handling more than a 2 percent blend. "Once we have a successful winter, there will be a push toward a 5 percent blend," Olson said. " A majority of these terminals are putting in capabilities."

Given the rise in popularity of biodiesel and the increase in production, it doesn't seem long before other states follow Minnesota's lead in making biodiesel a natural part of the fuel supply. "Minnesota was the first, but it won't be the last," Kersting said.

Dave Nilles is associate editor of Biodiesel Magazine. Reach him by e-mail at [email protected] or by phone at (701) 746-8385.
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