Against the Odds

Continued investment and expansion took place in the U.S. biodiesel sector throughout 2017, despite rising political uncertainty and a lapsed tax credit. Here is an overview of some of the activity, plus a special sidebar story from Joe Jobe.
By Ron Kotrba | January 05, 2018

As 2017 dawned with another expired biodiesel tax credit—the fifth lapse in seven years—and a new, inexperienced administration, it was unclear what sort of year the U.S. biodiesel industry would have. Biodiesel imports in 2016 were pouring in to the tune of nearly 700 million gallons, mostly from Argentina, and renewable diesel imports topped 220 million gallons. Was the biodiesel renaissance of 2016 over? Not exactly.

Certainly 2017 was not an ideal year for U.S. biodiesel, with rising political uncertainty and threats of cuts to the biomass-based diesel and advanced biofuels categories in the Renewable Fuel Standard. But the biodiesel lobby and its political champions were able to quell the proposed cuts from a new oil-friendly EPA administrator, if only to take solace in a stalled biomass-based diesel standard next year at 2.1 billion gallons and a 10 million gallon increase in the advanced category this year.

Though the RFS will see no growth for biodiesel in 2019, the National Biodiesel Board Fair Trade Coalition has been successful in its antidumping and antisubsidy trade cases against Argentina and Indonesia with imposition of hefty duties by the U.S. Department of Commerce on imports from those two countries. And while the antidumping case is still ongoing, the measures will free up more than 500 million gallons of marketspace taken in 2016 by imports from those two major biodiesel exporters.

“2017 was a much better year than I expected,” says Ian Lawson, sales director for biodiesel technology provider Jatrodiesel Inc. “Things went rather well with the Trump administration, considering it could have been a total disaster.” Lawson thanks the industry’s political champions for maintaining their support for biodiesel in the face of significant pressure from Big Oil and its stout political muscle.

Significant project development took place over the past year in all segments of the industry. That growth was surely tempered by political and economic forces, but it was growth nevertheless. And for the first time in a number of years, we even witnessed the comeback of new builds.

Greenfield Projects
This fall, Cargill made headlines when it announced plans to build a 60 MMgy biodiesel plant in Wichita, Kansas. The new facility will be located next to Cargill’s oilseed processing plant and will replace an existing oil refinery managed by Cargill’s global edible oil business. Cargill has contracted with Air Liquide Engineering & Construction to build the plant, its seventh for Cargill worldwide, using Lurgi technology. Cargill currently operates two large-scale biodiesel plants in Kansas City, Missouri, and Iowa Falls, Iowa. It produces ethanol and biodiesel in the U.S. and the EU, ethanol in Brazil, and biodiesel in Argentina. The Wichita plant will employ 35 full-time workers and is expected to cost $90 million. Construction was scheduled to begin in December with completion targeted for early 2019.

Cargill’s announcement came just a month after stiff preliminary duties were imposed on biodiesel imports from Argentina. According to Genscape and its data collected through Vesseltracker, Cargill was consignee of at least 10 shipments of biodiesel imported to the U.S. from Argentina in 2016. 

Another major greenfield project under development is a 30 MMgy biodiesel plant in Spiritwood, North Dakota. Minnesota Soybean Processors (MnSP) and its subsidiary North Dakota Soybean Processors are raising equity to build a $287 million soybean crush facility and refinery to crush 125,000 bushels of soybeans per day. The complex will produce 900,000 tons of soybean meal and 490 million pounds of RBD soybean oil per year, half of which will be used for biodiesel. MnSP owns and operates a soybean crush facility and 30 MMgy biodiesel plant in Brewster, Minnesota.

In August, NDSP and the Jamestown/Stutsman Development Corp. signed a letter of intent (LOI) to advance development of the project. NDSP selected a site on 80 acres in the Spiritwood Energy Industrial Park. According to MnSP, the LOI facilitates transfer of land from JSDC to the Spiritwood Energy Park Association LLC and infrastructure improvements such as additional rail capacity. NDSP has completed a feasibility study and a preliminary frontend engineering and design study for the project. MnSP is investing $60 million in NDSP and will continue to be the majority controlling member following the capital raise. MnSP will be responsible for the day-to-day operations of the facility. The goal, according to Bruce Hill, MnSP board president, is to complete the equity drive by March 31.

In Pixley, California, Calgren Renewable Fuels—a 57 MMgy ethanol plant—was awarded a $3.6 million grant from the state energy commission to help build a biodiesel production facility on-site. The plant will feature 5 MMgy of production capacity utilizing supercritical process technology from Jatrodiesel.

Jatrodiesel describes its Super technology as a single-stage process that puts no limit on free fatty acid (FFA) levels in feedstock. Jatrodiesel’s first commercial Super plant was built at Patriot Renewable Fuels’ ethanol plant in Annawan, Illinois, now owned by CHS Inc. It says the process cuts biodiesel processing costs by 25 to 28 percent. Feedstock for the new plant will be distillers corn oil produced on-site from Calgren’s ethanol process, along with brown grease, acid oils and other low-cost material transported from off-site.

The grant was awarded to Calgren through its special-purpose entity, SJV Biodiesel LLC, which stands for San Joaquin Valley, and requires $4.9 million in match funding. Lawson says while there was some delay in receiving the grant money from the state, everything is going according to plan. “The engineering is done,” he says. “We are ready to put steel in the ground.” He says the design for Calgren is slightly different than the plant built in Illinois. “We’ve gone from two reactors to one,” he says. Lawson says he anticipates completion by April.

Expansions, Upgrades
In late July, Ag Processing Inc. (AGP) completed a major expansion project at its Sergeant Bluff, Iowa, biodiesel production facility. Built in 1996, Sergeant Bluff was the nation’s first commercial-scale biodiesel plant. Production capacity has now doubled from 30 to 60 MMgy. The biodiesel project was coupled with construction of AGP’s new on-site soybean oil refinery, which supplies feedstock to the biodiesel plant. The complex now features integrated soybean processing, oil refining and large-scale biodiesel production. AGP owns 10 soybean processing facilities across the Midwest and three biodiesel facilities with installed capacity totaling 150 MMgy.

San Diego-based BQ-9000-certified biodiesel producer and marketer New Leaf Biofuel has begun work to double its production capacity from 6 to 12 MMgy with help from a state energy commission grant for nearly $3.8 million. The project will double capacity without expanding the plant’s footprint through conversion of batch to continuous processing using Lutros technology. Jennifer Case, president of New Leaf, tells Biodiesel Magazine ground has been broken on Phase 1—expanding the tank farm. “We’re really excited about having more storage,” she says. “We really need it, it’s one of our biggest challenges. We are tank-locked a lot, and we could be producing at a much higher capacity now if it weren’t for this logistical bottleneck.”

Case says Phase 2 is in design and involves retooling the plant for conversion from batch to continuous flow. She adds that the plant will shut down mid-2018 as it reconfigures for expansion and continuous processing. “Our intention is to run as long as possible,” she says, adding that no interruption in biodiesel supply will occur for those to whom New Leaf markets fuel. New Leaf started production in 2006 at 500,000 gallons a year. The $3.8 million grant for expansion requires an additional $4.5 million in matched funding.

Austrian biodiesel plant manufacturer BDI-BioEnergy International AG had a solid year of business in the U.S. Shortly after completing upgrades, optimization and expansion at Crimson Renewable Energy LP in Bakersfield, California, which tripled production, the company contracted with Kolmar to modernize American GreenFuels in New Haven, Connecticut, to increase capacity and feedstock flexibility.

After New Haven was completed, Crimson rehired BDI to build a new plant in Bakersfield to run alongside its existing plant, featuring BDI’s RepCat technology, a patented system for low-quality feedstock with high FFA employing a recyclable catalyst. The new plant will process greasy waste from metropolitan areas in California. BDI says this will be the first plant of its kind in the U.S. Hermann Stockinger, BDI’s vice president of sales, tells Biodiesel Magazine the RepCat plant will add another 12 MMgy to the existing 24 MMgy of capacity at Crimson. Completion is scheduled for mid-2019.

Renewable Energy Group Inc. also made progress on two major projects this past year. Last spring it secured financing for the $24 million expansion project at its Ralston, Iowa, biodiesel refinery, increasing capacity from 12 to 30 million gallons. REG also finished upgrades at its Emden, Germany, facility in July, where it invested 2.5 million euros to install a biodiesel distillation column and thermal oil heater.

In Erie, Pennsylvania, American Biodiesel Energy started selling product again in early 2017 after a long hiatus. Plant manager Chase Akerly says the company was incorporated by his grandfather 10 years ago and started operating a traditional biodiesel process. After a 2011 fire, the company rebuilt but was unsuccessful. Akerly says he began testing enzymatic processing with Novozymes three years ago. “Then, 18 months ago we took the enzymatic process to 10,000-gallon tanks,” he says. “We were working with brown grease and other high-FFA material, and we had great success with used cooking oil, but we like reacting lower-quality, higher-FFA feedstock.”

Last May, the plant went through another redesign, changing pumps to variable speed drive and designing a second reactor. “We redesigned everything,” Akerly says. Today the plant is sized at 2.5 MMgy. Akerly says he hopes to hit 50 percent capacity by end of 2017. “We’re utilizing Novozymes’ one-pot process where we run multiple reactions at one time,” he says. Akerly is adding more reactors and expects to double capacity in 2018.

Renewable Diesel
The past year saw several interesting renewable diesel investments and considerations. In the midst of the Diamond Green Diesel expansion from 160 to 275 MMgy in Norco, Louisiana, joint owners Valero Energy Corp. and Darling Ingredients Inc. announced initiation of an engineering and construction cost review to analyze further expansion to 550 MMgy. A final decision on its newest project is expected this year. If a decision is made to proceed, the new capacity would be available in 2021. The existing expansion project is scheduled for completion in Q2 this year.

In Geismar, Louisiana, REG completed a $20 million acquisition of 82 acres around its 75 MMgy renewable diesel plant from Lion Copolymer. REG is exploring expansion in Geismar by an additional 37 MMgy through upgrades and another 10 MMgy through new equipment. REG is also evaluating a number of other sites for expansion of renewable diesel production capacity, including Seneca, Illinois, and Grays Harbor, Washington.

Neste Corp. spent much of 2017 contemplating investment in new production capacity in Singapore or the U.S. after a very profitable 2016 in its renewables division. The company says its renewables capacity increase program will include debottlenecking of existing production capacity from 2.6 to 3 million tons by 2020, and building new capacity. At press time, Neste announced its decision to expand in Singapore rather than the U.S.

Finally, East Kansas Agri-Energy LLC has completed its 4.5 MMgy renewable diesel plant co-located with its ethanol refinery in Garnett, Kansas, a company official tells Biodiesel Magazine. EKAE has been quiet about the development as it tweaks the process for this first-of-a-kind project. The company announced the project in 2014 and was working with WB Services, which subsequently filed bankruptcy.

With more biodiesel being produced and used, naturally the infrastructure to blend must grow—and several investments in the U.S. have been made over the past year. In November, biodiesel producer Hero BX celebrated one year of business at its blending and distribution terminal in North Hampton, New Hampshire, with an open house and appreciation event. The terminal, offering customized blends from B2 to B80, can store 5,000 barrels of heating oil and biodiesel. “We made an investment in this infrastructure to get biodiesel into the hands of the dealers that were longing for it, and ultimately, the consumer,” says Tim Keaveney, Hero BX vice president of sales.

Sapp Bros., owner of 17 travel plazas and more than 30 wholesale locations across the U.S., opened its new biodiesel blending terminal in Norfolk, Nebraska, in August. Its biodiesel is sourced from BQ-9000-certified biodiesel production facilities and made from soybean oil. MEG Corp. provided consultation services and technical expertise in development of the new biodiesel blending terminal.

Last spring, Conestoga Energy Holdings LLC acquired the assets of VicNRG, a leading marketing, distribution and terminal operating company for biodiesel. Two months later, Victory Renewables, now owned by Conestoga, opened a new biodiesel blending facility in Box Elder, South Dakota, which facilitates using biodiesel in the western part of the state.

Author: Ron Kotrba
Editor, Biodiesel Magazine
[email protected]

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Heartbreak Ridge: ‘Improvise, Adapt, Overcome’
An Innovation Story
By Joe Jobe

April 1980, six months into the Iranian Hostage Crisis, President Carter ordered a secret military mission to rescue 52 American hostages. The nation’s most elite clandestine special missions unit, Delta Force, was tasked to carry out the mission. Weather, equipment, communications and other breakdowns caused the mission to end in complete failure. The failure inspired formation of a new group to be the maritime counterpart to Delta Force to lead the military’s counterterrorism efforts, Seal Team Six. The new group’s capabilities were put to the test in 1983 when a communist coup in Grenada threatened the safety of 600 American medical students studying on the island. Seal Team Six was deployed on its first combat mission as an advance insertion unit ahead of invasion by the U.S. Marines. Seal Team Six’s debut was a disaster. The mission, however, was a success as was depicted by the 1986 movie Heartbreak Ridge produced and directed by, and starring, Clint Eastwood. The enduring line in that movie should become the creed of the U.S. biodiesel industry: Improvise, adapt, overcome.

Constant struggle and pressure leads to problem-solving, which leads to innovation. The Discovery Channel’s recent documentary Hot Grease profiled some of that struggle and innovation through the lens of biodiesel operations in Houston, the heart of the nation’s energy infrastructure. Prominent in that story was the acquisition and refurbishment of the 90 MMgy World Energy Biox Biofuels production facility as well as its Houston Hub distribution center in Galena Park. The Houston Hub is designed to enable large-scale pipeline shipments throughout the U.S., which has the potential to revolutionize biodiesel distribution efficiencies. Discovery’s profile of this was important because it showed that biodiesel is not just a novelty fuel; it is now a serious and meaningful contributor to the nation’s energy supply. World Energy’s rise to the second largest U.S. biodiesel producer with four plants and 220 million gallons of capacity is a good example of the biodiesel industry’s ability to adapt, grow, innovate and scale. 

In talking with the technical folks at World Energy recently, I came across an untold story of innovation that demonstrates the kind of inventive problem-solving that goes on every day in this industry. Susan Purdue is an engineer and vice president of manufacturing at World Energy. I asked her what it took to bring the idled Houston plant, one of the U.S.’s largest, and the multimodal distribution hub up and running. “We had some major obstacles to overcome,” she says. “But those obstacles resulted in us inventing a whole new technology in the process.” She had my attention. 

The plant did not have a pretreatment facility or a filter press to meet the cold soak requirements. It was only capable of running RBD soybean oil or palm oil. The addition of those assets would have cost $5 to $10 million for a plant of that size. The facility was trying to run crude degummed soybean oil, which has more gums than RBD. There were problems getting good reactions and washing difficulties due to the gums ending up in the biodiesel. The technical team struggled for months to find a solution to the problem. “Darcy Lefsrud, Brandon Gagliano, Mark Tarrien and I collaborated with the rest of our technical team, especially from the plant in Natchez, Mississippi,” Purdue says. “The Natchez plant has similar equipment but does not have the problems that we were seeing.”

The 72 MMgy World Energy plant located on the Mississippi River in Natchez is operated by married chemical engineers Wanda and Rut Horne, plant manager and process engineer, respectively. Al King is another engineer in Natchez who was instrumental in turning the former chemical additive facility into a biodiesel plant. Along with Greg Hopkins, technology services director from the Rome, Georgia, plant, this engineering dream team is like a Seal Team Six of biodiesel engineers. Rut had developed a new method for glycerin washing that created a reaction to cause the gums to fall out and go into the glycerin rather than the biodiesel. The team adapted this new method to optimize it for the Houston process. The breakthrough improved the reaction process and solved the washing and emulsification challenges.

“We actually created a new technology that is a chemical alternative to adding an expensive pretreatment asset,” Purdue says. “It was an elegant solution that will allow us to invest in different optimizations at the Houston plant.” The Houston plant is a partial batch and partial continuous process. World Energy has plans to eventually make the whole process continuous. “After deciding that we were going to transition to an all-continuous process, Darcy, Brandon, Mark and I loaded up and went on a little road trip to Natchez where we spent a week designing the Houston continuous washing upgrade based on the Natchez model,” Purdue says. “Going from batch to continuous is like going from a manual transmission to an automatic.” The Houston plant is now running successfully, servicing pipeline shipments and planning to double capacity.

Improvise, adapt, overcome. Being in the biodiesel business is to be a problem-solver, and we seem to never have any shortage of problems to solve. Those happen to be the exact dynamics that inspire innovation. And while many days the biodiesel business feels like Heartbreak Ridge, a culture of constant innovation is a hallmark of an industry on the rise.

Author: Joe Jobe
Founder, Rock House Advisors LLC
[email protected]

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