Recent plant start-ups raise feedstock questions

By Nicholas Zeman | October 16, 2007
Approximately 6,000 people attended the grand opening of Louis Dreyfus' new biodiesel plant in Claypool, Ind. The 80 MMgy facility drew considerable attention as the largest soy-based biodiesel plant in the world. News crews from as far away as France were on hand to document the event, and the state's governor was there, too. The facility started production in August and will be fully operational by mid-October.

Two other large-scale biodiesel producers started operations in August, as well. Archer Daniels Midland Co.'s (ADM) 85 MMgy facility-the largest canola-based biodiesel plant in the country, if not the world-is producing at full capacity in Velva, N.D. The largest overall biodiesel plant, Imperium Renewables, started biodiesel production at its 100 MMgy facility in Aberdeen, Wash.

These plants that started up within weeks of each other signal a milestone for the biodiesel industry. This is major volume-more than 17 percent of the biodiesel industry's current capacity.

To portray the sheer size of these facilities, consider the fact that Louis Dreyfus will be capable of processing nearly 50 million bushels of soybeans and producing more than 1 million tons of soybean meal annually. Those are more soybeans than Indiana can provide independently. "We will buy Indiana soybeans whenever we can, but we will have to source some feedstock from outside to meet our processing needs," said Mike Mandl of Louis Dreyfus.

ADM's facility may require more than 100 percent of North Dakota's canola supply. The state is the leading canola grower in the United States, producing more than 95 percent of the nation's crop. Will ADM be able to coax that much feedstock away from other markets? "That plant is going to require about 700,000 tons of seed, so some will have to come from somewhere else," said Eric Mack, a Velva canola grower and board member of the Northern Canola Growers Association. "In the past, we've produced over 900,000 tons, so there might be more acres going into the future. There are other crush operations around besides ADM, so there will be more canola oil for different things."

Imperium is capable of storing up to 17 million gallons of biodiesel and feedstock at any one time, but is not limited to a single feedstock. The site includes eight main tanks, which can hold 2 million gallons each, and two reserves that can hold 500,000 gallons.

Will all that capacity ever be utilized? As large plants continue to open nationwide, reports indicate the biodiesel industry is operating below capacity. One reason for this is the increase in soy oil prices. However, because Louis Dreyfus is an oil broker and ADM has several crush operations nationwide, including one in Velva, perhaps feedstock procurement will be less of a challenge.
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