Editor's Note

Is the industry overb ilding or preparing for what's to come?
By Tom Bryan | June 01, 2006
Several weeks back, a cordial stranger stopped by my office to introduce himself and ask me a few simple questions about the state of the U.S. biodiesel industry. I don't get too many walk-ins, and such infrequent occurrences can sometimes catch me off guard. For whatever reason though, this one didn't, and the unexpected meeting turned out to be time well spent.

The guy was wearing a navy pin-striped suit, and I had him pegged as a banker or an accountant right away. In fact, he was the latter. He was also an ethanol plant investor itching to get into the business of biodiesel. Specifically, this guy was wondering if there "really is a market out there" for all the existing, under construction and proposed biodiesel plant capacity being reported. So we talked, joked and speculated about the prolific growth taking place. We spoke briefly about various projects in the upper Midwest-including Archer Daniels Midland Co.'s (ADM) 85 MMgy canola-to-biodiesel plant being built in central North Dakota-and we postulated about theoretical maximum consumption and production levels before trying to come to some conclusion about whether or not he should throw his hat into the biodiesel ring. Ultimately, we both had more questions than answers.

I think we're in good company. The truth is, there's an awful lot of U.S. biodiesel plants being built and expanded right now. Things are really booming fast-some say too fast-and that doesn't sit well with a lot of existing producers. The fact remains that biodiesel probably does have a domestic consumption limit that will be met in the not-too-distant future if the pace of industry growth is sustained. But hold on; there's a handful of "great big unknowns" that could keep the gates of industry expansion wide open for years to come. First, there's the potential for a biodiesel-specific national renewable fuels standard with a tall ceiling. There's also a very good chance of more states legislating low-blend mandates, as well as the increased use of higher blends and pure biodiesel. I should also mention the slim but not impossible chance of a nationwide trend toward diesel-powered passenger vehicles.
Honestly, no one really knows what's around the corner. If and when the biodiesel market does slacken, experts say it will likely turn into a game of survival of the fittest. In other words, the producers most at risk won't be the newest or the oldest plants but the smallest, least efficient ones. Already, we are seeing a trend toward building big. In addition to ADM's colossal facility, Louis Dreyfus is building a 50 MMgy plant in northern Indiana that it plans to eventually expand to 80 MMgy. Minnesota already has two 30 MMgy biodiesel plants on line-both massive in their own right-and this month's page 26 feature takes a close look at the development of one of them.

While this issue is largely dedicated to our annual Proposed Biodiesel Plant List, we chose to profile Glennville, Minn.-based SoyMor Biodiesel because the plant represents the size and type of operation that is becoming more and more common in the biodiesel industry. It's also a story about teamwork, project development, business, construction, quality control and process technology. Ultimately, it's a story about daring to do things first. And if there's any industry that can relate to that, it's this one.

Correction from our April 2006 issue:
On page 23 in the Inside NBB section, a new member of the National Biodiesel Board (NBB) was incorrectly located in Mantachie, Miss. North Mississippi Biodiesel Inc. is actually located in New Albany, Miss.
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