Mile-High Quality

As the biodiesel industry continues to explode throughout the soy-oil-rich Midwest, some plant developers are considering a different approach. Producing high-quality biodiesel near high-demand metro areas continues to be the game plan for BioEnergy of Colorado
By Dave Nilles | April 01, 2006
Sited adjacent to an expansive rail yard in the north metro reaches of Denver likely isn't the idyllic site for a biodiesel plant. After all, the clean air and wide open spaces synonymous with biodiesel are perhaps more appropriately represented by the scenic Rocky Mountains reaching skyward on the western horizon. But for biodiesel producer BioEnergy of Colorado, there couldn't be a better location.
Taking advantage of simple access to feedstock and a market thirsting for solutions to its air quality issues, the industrial area on Denver's north side provides the perfect location for a biodiesel company with a vision.
For over a year, BioEnergy of Colorado has produced high-quality biodiesel that meets the mile-high expectations of its users. Through its focus on building production facilities located near -and serving-end-users, the company hopes to fill the biodiesel void near population dense regions.

Finding the starting point
BioEnergy of Colorado President Tom Davanzo came upon the biodiesel industry almost by chance. He was part of an investor group that purchased a loan from a Chicago bank. The assets included in that loan helped pave the way for Colorado's largest commercial biodiesel producer.

Included in the deal was property consisting of a vacant asphalt railcar cleaning facility. Besides offering immediate rail access-up to 100 lines are adjacent to the property-the site holds a vast tank farm of approximately 400,000 gallons of storage, mostly in 25,000-gallon tanks. With the ability to park 15 railcars on the spur, the site offered everything needed for a mid-sized biodiesel production facility, finally giving Davanzo the chance to make an entrance into the business. "Sooner or later, biofuels were going to become increasingly important," he says. "It was a chance to get involved before the marketplace was mature."

Going from investment to production took some time, however. After nearly eight months of painstaking cleaning and preparations, the facility was finally ready for full-scale biodiesel production. In the meantime, the group, already operating under the BioEnergy of Colorado name, was experimenting with small batches of biodiesel. Over the course of a year, Davanzo's engineers focused on a production technique of their own design.

Construction commenced in January 2005 on the final full-scale 10 MMgy biodiesel facility. The plant began producing large levels of biodiesel in April. By taking the time to develop a precise production technique and slowly ramping production, BioEnergy of Colorado had the opportunity to focus on another important factor in its current success-quality.

Setting stringent standards
Developed through experience, BioEnergy of Colorado's quality control program has persistently evolved. The plant's original layout had the final product going directly into railcars, which didn't create the ideal situation for maintaining quality control. "At first, we didn't understand the importance of checking the quality before we loaded the railcars," Davanzo tells Biodiesel Magazine. "We've grown to realize there are some small variances including moisture pickup that can occur. I think that the issue of quality cannot be overstressed both at the production location and as it moves into the distribution and marketer programs."

With all eyes in the biodiesel industry on the issues that afflicted Minnesota's B2 requirement in the program's early weeks, it became even more apparent to BioEnergy of Colorado that its biodiesel must be produced at the highest quality. The facility, which already had its own quality control capabilities, including flash, glycerin, free glycerin and moisture tests, began testing every daily product flow from the plant, according to Davanzo. The storage tanks are also checked prior to shipping. A monitoring system keeps track of all relevant information at each stage of the process, including speed, temperature, flow rate and pressure. "We guarantee quality before we load into railcars or trucks," Davanzo says.

Davanzo expects the end result to be BQ-9000 accreditation. In order to prepare for implementation of the quality assurance program, BioEnergy of Colorado is hiring one full-time person to bring the rest of the plant's staff up to speed. After all, quality programs pay off in increased productivity and better acceptance in the marketplace.
"The single most difficult thing is that it's not enough that you get it right at your own shop," Davanzo says. "It's an investment that fuel distributors have in place The job that marketers have is very large-educating the public."

Working with distributors

Davanzo is quick to recognize those that blazed the biodiesel trail before him. "World Energy and West Central Soy single-handedly carried the banner for the past decade or so," he says. "We owe them a thank-you for getting that marketplace interested."

However, Davanzo feels there is an ideal place for smaller biodiesel producers to interact with like-sized distributors. That's why BioEnergy of Colorado works with local fuel distributors, so they understand the requirements that make biodiesel successful in the market. That work helps shorten the learning curve for the distributors, something that BioEnergy of Colorado National Sales Manager Monte Malone had to do. "Quite frankly, not having any knowledge of biofuels in the past, I dove right into it and started studying the markets," Malone says.

With more than 25 years of sales experience, it didn't take Malone long to realize he was part of a good thing. It allowed him to understand and alleviate the issues local distributors faced on a daily basis. That's harder for larger producers to do from a long distance, Davanzo says, explaining that it's difficult to get intimate with a fuel distributor's environment from a remote location.

"It's one of the great things about the U.S. entrepreneurial system," Davanzo says. "Everyone has a profit incentive to understand a new product and get it into the marketplace. The vitality of the whole system drives us to work as partners to get new production into the marketplace."

Most of the company's biodiesel is concentrated in the Rocky Mountain region. They sell biodiesel to any state that borders Colorado, according to Malone. "We've sold as far east as Alabama and as far west as California," he says.

While the company's reception in the end-user market is growing, it still relies mainly on the infrastructure of its fuel distributors. "We are focusing on selling some blends locally, but 95 percent of our sales go right to our jobbers," Malone says.

With more jobbers and fuel distributors jumping on board, it became time for Davanzo and Malone to look at expansion.

Expanding the plan
Once the quality standards were met, BioEnergy of Colorado ramped up production steadily at its facility through September 2005, when it hit peak production levels of approximately 700,000 gallons per month. Winter eroded demand in the local marketplace, forcing the company to decelerate production.

With spring now firmly in sight, the plant is again ramping production. The company also recently hailed the introduction of a second facility: a 5 MMgy plant located three miles from the initial facility.

Starting up in February 2006, the new plant, operating as Biofuels of Colorado, is a culmination of all that was learned at the first facility. After securing the new site in September 2005, the facility was constructed in approximately six months. Facility engineers played an important role in designing the new plant through engineering the heat transfer systems and designing movement of product through the complex, Davanzo says.

Both facilities are multi-feedstock capable. While degummed soy oil is the primary feedstock, locally grown canola oil has also been used. "We want to get more and more locally produced crops to process in our plants," Davanzo says.

Both plants use a batch front-end process on a continuous flow plant, which takes approximately 24 hours for a gallon of feedstock to become a gallon of finished product. The plants operate 24 hours per day, five days per week.

Both plants are also located near distribution terminals, making it possible for trucks to come into the biodiesel plant for the renewable fuel and then go straight to nearby racks to splash blend it with diesel.

The plants' glycerin is sent to chemical companies to be refined into higher-quality products. Others are using the glycerin as a fuel.

With a new facility offering increased efficiency, it's time for BioEnergy of Colorado to consider expansion once again.

Filling the niche
"We can have fabulous stainless steel palaces throughout the Midwest," Davanzo says. "There is room for guys like us around population centers." Davanzo's approach to the biodiesel industry makes sense. His new plant can be considered a prototype of what he hopes to replicate in other cities. "We think the industry is going to carve itself into two spots," Davanzo says. "There will be these fabulous, marvelously engineered 40 to 50 million gallon plants. Those plants will require 15 to 20 acres of space and have enormous demands." The second type of plant involves smaller plants built primarily to serve end-users in metro areas. The ethanol industry equivalent is called "destination facilities." It's becoming more common in both industries, probably more so in the biodiesel industry, according to Leland Tong, business specialist with consulting group Marc-IV. "We are seeing kind of a geographical dispersal of biodiesel plants," he says. "Politically it's good. They can reach out to everyone outside the corn and soybean legislators." Feedstock supply can be an issue to end-user plants. "The key thing is access to feedstock," Tong says. "That is the trend as much as anything. Feedstock supply located near an urban area is a win-win." BioEnergy of Colorado has found both. With that, they're finding a marketplace steadily becoming more interested in biodiesel. Davanzo feels a large portion of that marketplace already understands the fundamental value of biodiesel. "I hope that market finds that American-made biodiesel may not always save them money, but it's always good for the United States and recirculating domestic dollars," he says.

More information on BioEnergy of Colorado can be found at

Dave Nilles is a Biodiesel Magazine staff writer. Reach him at [email protected]or at (701) 373-0636.
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