From the plant to the pump

Incorporating biofuels into an infrastructure dominated by petroleum is the next practical step in reaching greater energy independence for the United States. As the biodiesel industry expands, so too does the supply chain matrix that supports it. The journey biodiesel takes from the facilities where it is produced to the pumps where it is dispensed is an integral, yet low-key, segment of the industry.
By Nicholas Zeman | May 01, 2006
Handling, delivering and blending biodiesel has, in years past, been expensive and uniquely challenging, from both a logistical and procedural standpoint. For example, the terminal infrastructure required to bring the biofuel and its petroleum counterpart together for blending has not always existed when and where consumer demand has. The situation is vastly improved today, though, as the U.S. biodiesel industry plows forward with a historic expansion now marked by the construction of at least 27 facilities in addition to 46 existing plants, a handful of which are expanding. What is often overlooked by observers of industry growth is the comparably emergent biodiesel distribution infrastructure-something the ethanol industry calls its "virtual pipeline"-that is rising in sync with capacity and demand.
No, the modern biodiesel industry isn't beyond every supply chain challenge it faced five or 10 years ago, but progress has been steady. New developments have made winter handling of biodiesel blends easier, for example, and the biofuel is now less susceptible to contamination and degradation during storage. Biodiesel is now transported by both road and rail, of course, and more production plants and fuel terminals have installed automated systems that allow wholesale customers to fill their own tanks.
That's a sort of "30,000-foot view," but what's happening on the ground, behind the scenes? How does biodiesel-and ultimately biodiesel blends-travel from point A to point B? The answer is both intricate and varied, but the industry professionals engaged with the biofuel's supply chain can provide valuable insight.

A Smoother Process
The U.S. Department of Transportation's interstate weight requirements place limits by weight and call for fuel-carrying tankers to be measured with precision. Union County Biodiesel LLC, a 5 MMgy plant in Morganfield, Ky., is among a growing number of producers now equipped with metered pumps that conveniently fill tankers to capacity with speed and accuracy. Plant Manager Andy Sprague describes the process as a worry-free component of plant operations, so much so that he tells Biodiesel Magazine load-out is now a "minor" operational focal point.

Sprague says a load of biodiesel takes up less volume, pound-for-pound, than petroleum diesel. A super tanker, for example, can legally haul 80,000 pounds of fuel. Biodiesel weighs about 8.5 percent more than petroleum diesel, so trucks rolling away from plants like the one in Morganfield are carrying approximately 6,800 gallons less fuel than what is standard by petroleum industry standards.

Union County Biodiesel's load-out is exclusive to trucks, and the plant usually fills two per day. The facility works with multiple distributors, and each one not only markets (i.e., buys and sells) the plant's biodiesel, but carries the expense of transporting the fuel, too. "Every gallon is picked up at our gate," Sprague says, explaining that while the biodiesel produced at some U.S. plants is shipped to far-off destinations, almost all of the fuel made at Union County Biodiesel is consumed in the northwest part of the state, a region that borders Indiana and Illinois. "Most of our distributors are within a 60-mile radius [of the plant], and we don't know if they take the product another 60 miles, but we feel most of our biodiesel is consumed within a 125-mile radius," Sprague says.

Demand for biodiesel is on the rise nationwide, and although more than 300 MMgy of additional capacity is under development, supplies are relatively tight. For now, that means most biodiesel producers don't have to look far to find markets for their product. "We're in that good place," Sprague says. "[Oil prices are] high and biodiesel demand is high, which typically yields a strong market. Farmers, [in particular], want to consume their own product. It has been my experience that when demand is high, consumers who want the product are willing to come and get it."

Injection Blending Becomes Routine
At the consumer level, most U.S. biodiesel is purchased in low-level blends with petroleum diesel-B2 and B5, for instance-which means blending processes are a major component of distribution. Don Irmen, a North Dakota-based marketing manager for the 12 MMgy West Central plant in Ralston, Iowa, tells Biodiesel Magazine injection blending is the way to go whenever possible. "Splash blending works well if it's done properly, but biodiesel weighs more than regular diesel. If it is not done correctly, [problems can arise]."

West Central, which is not only a producer but also a distributor of biodiesel, has made it a priority to establish biodiesel hubs near petroleum terminals. That allows tanker trucks to fill up with biodiesel and petroleum diesel for blending at the same spot.
Even when biodiesel travels by rail from the Midwest to markets on the East and West Coasts, West Central still uses trucks to get the fuel to the tank farm where railcars are loaded, Irmen says. "What we rail out mostly goes to the East and West coast," he explains. "We ship about 60 percent of our biodiesel to customers, and the other 40 percent is picked up. Customers who own terminals will blend the product themselves." Irmen is referring to companies like Countrymark Co-op, an Indiana-based petroleum company that specializes in meeting the needs of agricultural and on-road diesel customers in the region. Countrymark, which offers a complete line of fuels for transportation and stationary applications, is arguably one of the petroleum industry's strongest supporters of biodiesel and now blends about 75 percent of the diesel it sells with the renewable fuel, primarily at low levels.
Dennis Reynolds, terminal manager for Countrymark, says the company's Jolietville, Ind., terminal was the first metered biodiesel facility in the country, as well as the first to have a fully automated loading system and heated storage tanks. "A tanker driver pulls up to the loading racks, selects a product (a specific blend), hooks up the hoses and the machines do the rest of the work," Reynolds says. "We are pretty much out of splash-blending operations."
Farmers in Indiana, Ohio and parts of Michigan make up the lion's share of Countrymark's customers and Reynolds says the soy-based biodiesel the company uses is a great way to create market differentiation and further integrate with the agricultural community. Countrymark's members hold contracts to transport biodiesel blends from the company's terminal to retail outlets across the region.

Knowledge is Key
More and more terminals across the nation are following Countrymark's lead, putting high-speed biodiesel blending infrastructure in place. "The advantage of this is that distributors can go to one location to get various biodiesel blends," says Countrymark Sales Manager Steve Thomas, reiterating that Countrymark's terminals are state-of-the-art, equipped with fully automated loading racks, metered pumps and storage tanks and pipelines that are heated and insulated.

Biodiesel blends have sometimes been associated with certain cold weather storage and handling challenges, and despite a growing demand for the biofuel, Sprague says those issues have weighed heavily on the industry. "[Union County Biodiesel] has kind of been on hold while the weather warms up," he says. "We kind of limped along through the winter."

The cloud point of biodiesel and biodiesel blends is an important factor to consider in transporting the fuel. Biodiesel must not be allowed to drop below its cloud point when en route to its destination. The National Biodiesel Board (NBB) recommends that the fuel be transported "hot" for truck and rail shipping, or blended with winter diesel, kerosene or another low-cloud-point fuel.

When handling biodiesel, there are other storage factors to consider other than cloud point and cold-flow properties. For instance, in terms of long-term storability, it's been said that pure biodiesel can degrade unit rubber, and can also be susceptible to degradation and contamination. Cummins Diesel has performed several tests on biodiesel in relation to how the fuel is stored and its performance in engines. Howard Fang, lead scientist of the fuel and lube division at Cummins, says biodiesel can degrade substantially over time if proper precautions are ignored. Subsequently, when the degraded biodiesel and/or biodiesel blends are burned in an engine it can corrode engine parts and leave deposits that plug pumps and other mechanisms. These problems, Fang says, might be related to oxidation. "If the fuel is not oxidatively stable, it might have a tendency to form a deposit, and it might have a tendency to corrode the metal parts."

In performing its tests, Cummins placed biodiesel in storage tanks and examined the fuel every two weeks. "[Over time], you could clearly see that the biodiesel degraded substantially," Fang says. "In the beginning, methyl ester derived from the vegetable oil has a substantial amount of vitamin E-a wonderful antioxidant-but after [the vitamin] is used up, the biodiesel becomes vulnerable and the oxygen can easily attack the fuel. Natural inhibitors play a major role."

Also, Fang says additive technology should be utilized by biodiesel producers and distributors. In addition, the NBB recommends that B100 be shipped in a way that does not lead to contamination. The association says trucks and/or railcars should be washed out before being loaded-and the only residual that is acceptable in a tanker is petroleum diesel.

Demand Growing,
Some Buying In Bulk

Rising Phoenix Biofuels in Phoenix, Ore., might be described as a biodiesel retailer, wholesaler and redistributor that truly views biodiesel challenges as opportunities. "We have heated tanks so we can pump all winter long," says Abraham Harris, the company's manager. Rising Phoenix Biofuels has customers that buy in bulk and at the pump where B99.9 is sold. "We allow the 'fuel people' to blend ... and our price is more closely related to regular diesel than being a dollar more per gallon," Harris says. "There are a lot of people who buy 55-gallon drums and totes-we have a lot of farmers who buy bulk-but most of our traffic is at the pump.''

Rising Phoenix Biofuels' biodiesel often originates in the Midwest, Harris says. "It comes by rail car to a fuel yard and we broker truck and trailer transport from the fuel yard to our tanks," he says. "When it is produced locally, it gets here by truck."

The fact that a company like Rising Phoenix Biofuels is unable to purchase all of its biodiesel regionally perhaps speaks volumes about the rising demand for the fuel-and not just in the heart of America's farm country. And if Harris' ambition is any indication of the direction of the industry, biodiesel blends may soon be available at highway stops nationwide. "There will soon be signs [on Interstate 5] in Oregon for Rising Phoenix Biofuels, so everyone knows where they can get biodiesel," he says. n

Nicholas Zeman is a Biodiesel Magazine staff writer. Reach him at [email protected] or (701) 746-8385.
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