Harsh winter storms affect biodiesel industry

Posted Dec. 29, 2010

The East Coast was slammed with severe winter weather in late December. While most are familiar with the resulting travel delays, it is important to note that extreme weather events can also impact industry, including biodiesel producers.

Nearly two feet of snow fell in New York over the weekend. Such significant amounts of snow can affect not only road and air travel, but also rail transport. According to Daniel Falcone, northeast wholesale manager for Ultra Green Energy Services LLC, most biodiesel entering the New York metro market is currently transported via rail.

The New York biodiesel market is still maturing, Falcone said, which means there is not a lot of product storage available locally. To keep the supply of biodiesel moving to customers, it is important to ensure that the supply is reliably entering the market. "With snowstorms like this, it affects the rail by freezing switches and burying lines so that you're railcars can't come in," Falcone continued. "We were fortunate," he said, "because we had just received a shipment of biodiesel, which meant that we were able to store more product prior to the storm. We were just lucky enough where the rail made the switch so that we had additional bio stored for at least a week or two worth of sales," Falcone said.

He said the biodiesel market in New York City will continue to mature as the city works to implement its pending B2 mandate for home heating oil. This means that more biodiesel will be entering the market, and significantly more storage and blending capacity will be brought online. This should translate into a more extensive supply chain that is less susceptible to weather-related incidents.

While North Carolina received far less snowfall over the weekend-less than one foot-the impact on the biodiesel industry was even greater. According to Piedmont Biofuels President Lyle Estill, the region is simply not equipped to deal with rare winter weather events. In fact, he notes that North Carolina has traditionally only been hit with storms of this magnitude once every five or 10 years.

"We got walloped pretty bad by the storm," Estill said. Piedmont Biofuels employs trucks to collect waste cooking oil feedstock for the plant. Product is also picked up by customers via truckload. "When the roads are bad or impassible, my grease collection fleet, my short-truck delivery fleet, my customers coming in on 18-wheelers, they are all impacted by road conditions," he continued. While areas in the Midwest and Northeast are prepared to deal with snow removal, municipalities in the South generally do not have the equipment required to clear the roadways.

Although travel conditions were challenging, Estill notes that Piedmont was able to keep its fleet operating. "We managed to continue bringing in feedstock, and we managed to continue shipping fuel," he said. "We managed to keep it going, but it just ended up being long days, and delays. I had customer that couldn't get their truck in on time and so on."

The weather also impacted the Piedmont's production facility. "It got too cold to run my chiller," Estill said. "[That] brings down my distillation column, stopping my methanol recovery. It brings one portion of the plant grinding to a halt." To solve the problem Piedmont is in the process of retrofitting the chiller so that it can better handle cold weather events. The company is also taking action to better winterize and insulate the plant. As the market for biodiesel increases, Estill said it is important to ensure production can continue year-round without interruption.