Pure and Simple

Volga, S.D.-based South Dakota Soybean Processors is now offering SoyPure, a trademarked pretreated virgin soybean oil tailored for biodiesel production. Meanwhile, a large customer is about to come on line in neighboring Minnesota.
By Tom Bryan | July 01, 2005
Feedstock pretreatments can be expensive and complicated for biodiesel plants lacking the size and economies of scale needed to establish and maintain sufficient oil refining processes. With growing demands on biodiesel quality, production efficiency and yield, the adage "What you put in determines what you get out" rings especially true with today's producers. "When you use a quality feedstock, your outbound product is generally going to be that much better," said South Dakota Soybean Processors (SDSP) Commercial Manager Tom Kersting. "Your plant is going to run more efficiently, and throughput is going to be greater. It's that simple."

That's why Volga S.D.-based SDSP, a farmer-owned soybean processing company on the eastern edge of South Dakota, has developed and is now marketing SoyPure, a trademarked pretreated virgin soybean oil tailored for biodiesel and biobased product manufacturing. SDSP is reporting favorable product reviews from biodiesel producers from California and Washington to Minnesota and Iowa. "The response has been extremely positive," Kersting told Biodiesel Magazine. "Customers have reported improvements in quality and yields, and these efficiencies lead to lower manufacturing costs. I think most of these producers have experimented with recycled oils as well as refined bleached and deodorized oils-the common food-grade oil that you can buy from most major crushing plants-and they've found the pretreated oil that we're creating here works better in terms of less soap production in the process and better overall production in terms of pounds-in, pounds-out."

SDSP did not necessarily develop SoyPure for biodiesel production. However, because refined, bleached soybean oil was required by its sister polyurethane product manufacturing plant, Urethane Soy Systems Co., also based in Volga, branding and marketing the product to biodiesel plants was an easy decision. And despite the fact that SoyPure is a choice feedstock, Kersting said there is nothing particularly proprietary about the way it is made. "It's primarily a cost factor," he said. "It's more affordable for a processor like SDSP to complete the refining process because of our scale. It would be [less feasible] for biodiesel producers to take crude soybean oil and pretreat it on their own."

While SDSP did not provide Biodiesel Magazine with specific price references, SoyPure is, in fact, slightly more expensive than other domestic biodiesel feedstocks, including unrefined virgin soybean oil. Kersting said SDSP is doing all it can to keep the cost of the product "competitive" with other comparable feedstocks. Producers willing to pay a little more for the product should benefit from less pretreatment costs and greater efficiencies, according to Kersting. "When you look at the costs that a producer would incur when pretreating a feedstock on its own, using SoyPure for biodiesel production is cost-effective," he said. "When you look at this product, versus the amount of money it would take to clean up some of your recycled oils and fats-or taking crude soybean oil or some other crude vegetable oil-and trying to get it into a pretreated condition and ready to go into a reactor, this pays off."

Various U.S. soybean processors have been pretreating soybean oil for years, but Kersting said a large percentage of professionals in the biodiesel industry are still unfamiliar with the numerous grades of available vegetable oil. This situation presented an opportunity for SDSP, prompting the soybean processor to brand and trademark SoyPure. "We want to make [SoyPure] known as an oil specifically made for biodiesel production, so it will not be confused with other grades of oil that are out there," Kersting said. "We are saying, 'Use this as your standard.' I think that makes it easier for people looking for this type of thing to make a choice."

SDSP has a construction and management partnership with Minnesota Soybean Processors (MnSP), which is currently finishing construction on a 30 mmgy biodiesel plant in Brewster, Minn., just two hours southeast of Volga. The Crown Iron Works-designed facility, which will be among the largest biodiesel plants in the nation when it is completed in August, will provide SDSP with a large guaranteed market for SoyPure. SDSP and MnSP are two separate companies with independent farmer-owned boards, but with common management and a considerable amount of crossover ownership.

Kersting said the biodiesel plant being built in Brewster will benefit from the existing soybean processing plant infrastructure: heat, electricity, water, roads, rail, personnel and, most importantly, feedstock. The pretreated soybean oil that the MnSP biodiesel plant will likely use is produced in Volga, but the Brewster processing plant will soon have the capacity to manufacture SoyPure as well. Kersting said these factors, coupled with Minnesota's approaching B2 mandate, make the Brewster biodiesel plant location "a natural."

The biodiesel plant is expected to use just half of the SoyPure that the SDSP crush plant puts out annually. That's why the company is making a push to market the product to other North American biodiesel manufacturers. "The [SDSP] plant itself will produce approximately 60 million gallons of oil," Kersting said. "About 30 million gallons will go to the biodiesel plant [in Brewster]. In other words, there is an additional 30 million gallons that we could sell [to the industry]"

With established customer relationships throughout North America, SDSP is well positioned to meet the needs of biodiesel producers from coast to coast. The company has both truck and railcar fleets, and can provide delivered prices in railcar, truck, tote and drum quantities. "Some of the smaller biodiesel plants-and most of them are small right now-don't have access to railcars, they don't have a lot of contacts in the trucking industry either, so that's where SDSP can play a role."

Building and managing biodiesel plants is also a role SDSP wants to play. Kersting told Biodiesel Magazine that the company has had discussions with the developers of several proposed biodiesel plants and is beginning to offer its services as a full-service provider of construction and management services in the biodiesel industry. "That is what we are pursuing," he said. "We do have industry expertise, we have the feedstock supply and we are building up plenty of [project development, construction and management] experience."

SDSP is not placing all of its eggs in one basket though. Kersting said biodiesel production, even with the federal tax incentive, is still not quite as attractive as other forms of biobased soybean oil manufacturing, such as the production of polyurethane products. "Certainly one thing that has helped in terms of using vegetable oils [for both biodiesel and biobased products] is the fact that the price of petroleum-based products have gone up dramatically in the last few years," he said. "There was a time here in October, where on a cents-per-pound basis, vegetable oil was cheaper than petroleum oil. It's not there now, but every once in a while, when there are spikes in crude oil and drops in vegetable oils that price relationship makes these applications work."

Kersting believes as the U.S. biodiesel industry grows, more production feedstocks will inevitably be pretreated, branded and marketed to an increasing number of producers. "I think it is something we will see," he said. "However, remember that this is still a commodity business. You can brand things all you want, but oil is oil. In this business, when we're using all these different feedstocks to make biodiesel, I think a branded product has value. It allows a company to differentiate itself from those using waste grease or something like coconut oil if that's their intention. You can make biodiesel out of anything-any fat-so I think it is natural that others will follow along the same course."

Tom Bryan is editorial director of Biodiesel Magazine. Reach him by e-mail at [email protected] or by phone at (701) 746-8385.
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