There have been some exciting E15 announcements so far in 2015. Big name gasoline retailers, like&nbsp;<a href="http://www.ethanolproducer.com/articles/12196/kum-go-to-offer-e15-discount-at-grand-opening-event-in-iowa" target="_blank">Kum &amp; Go in Iowa</a>&nbsp;and&nbsp;<a href="http://www.ethanolproducer.com/articles/11843/sheetz-to-offer-e15-at-60-north-carolina-locations" target="_blank">Sheetz in North Carolina</a>,&nbsp;are adding E15 to their product mixes. In fact, on May 11 (the day this blog was written) Kum &amp; Go was holding a grand opening event at its Windsor Heights, Iowa, location and offering E15 for $1.99 a gallon.&nbsp;
It seems like a good time to talk about what retailers need to do to offer E15 and other higher blends. I contacted Mike O&rsquo;Brien, vice president of market development for Growth Energy for more information. One of the things Growth Energy does is work with gas retailers interested in selling E15 and other higher blends at their stores. (Side note, the Renewable Fuels Association and the American Coalition for Ethanol do this as well.)
There really isn&rsquo;t a one-size-fits-all approach to working with gas retailers, O&rsquo;Brien told me. It requires a discussion about the station owner&rsquo;s goals, what their current fuel system is like and whether they already offer E85. Growth Energy also helps retailers identify possible funding sources. One is the&nbsp;<a href="http://www.ethanolproducer.com/articles/11734/prime-the-pump-seeks-to-expand-e15-infrastructure" target="_blank">Prime the Pump</a>&nbsp;initiative, which is supported by members of the ethanol industry.&nbsp;There are other funding sources, as well, which vary from state to state.
Although Growth Energy&rsquo;s main focus is on E15, O&rsquo;Brien said, other blends like E25 and E85 definitely come up. &nbsp;One attractive option is installing a blender pump, or, as some prefer to call them, flex-fuel pumps. What&rsquo;s so great about blender pumps? O&rsquo;Brien gave me the scoop.
1. Blender pumps are a great thing for the ethanol industry. &ldquo;From an ethanol point of view, yes, blender pumps are absolutely going to be a good program for us and the industry because you now have the infrastructure for higher blends, going into the marketplace. &rdquo;
There are benefits for retailers too, however.
2. Blender pumps provide maximum flexibility for retailers, who are prepared for whatever comes next.
3. When E15 isn&rsquo;t available from an area fuel terminal, retailers can blend their own onsite from E85. Although there are retailers that can simply add E15 to what they offer already, some must add E85 at the same time. &ldquo;Most of the terminals in the United States will not make E15 readily available to retailers as a fuel,&rdquo; he said.&nbsp;
Blender pumps generally cost about $10,000 more than regular fuel dispensers, O&rsquo;Brien said. Total cost ranges from about $20,000 to $25,000 a pump, depending on the pump and whether it&rsquo;s a basic model or one with some extras. &ldquo;It&rsquo;s like buying a car,&rdquo; he says.
The two main pump dispenser companies are Wayne Fueling Systems and Gilbarco Veeder-Root. Another company, Bennett, has a new fuel pump system as well. All Wayne fuel pumps are warrantied for fuel with ethanol content of up to 15 percent ethanol while Gilbarco pumps manufactured in 2008 and newer are warrantied for E15. Gilbarco does, however, offer a retrofit kit for a base price of $1,500.
But it&rsquo;s not just about pumps. Retailers also have to think about what O&rsquo;Brien called a spaghetti nest of tanks, lines and other equipment underground. Although most retailers already have an ethanol-compatible underground tank, some older stations will need to add an additional tank. &ldquo;Most of the retailers that we have worked with so far have a tank that is compatible with E85,&rdquo; he said. &ldquo;It&rsquo;s rare to encounter an old tank that can&rsquo;t handle E85." Although the cost varies, depending on if it&rsquo;s a new build situation or if concrete needs to be torn up to put in a new tank at an existing station, installing a new tank can cost between $40,000 and $75,000 on the high end.
In a retrofit situation, where a gas retailer already has the tanks needed, sometimes there are a few other underground components, such as drop tubes or sump pumps, which need to be upgraded. &ldquo;[That&rsquo;s] typically a max of $35,000 to get everything right below ground,&rdquo; O&rsquo;Brien said.
Lance Klatt, executive director for&nbsp;<a href="http://www.ethanolproducer.com/articles/11473/minnesota-group-adds-stations-offering-higher-ethanol-blends" target="_blank">Minnoco brand gas in Minnesota</a>, which is offered at multiple gas stations with more coming,&nbsp;said all Minnoco retailers, so far, are electing to put in blender pumps to offer E85 and other blends. He estimated the average cost of pumps plus infrastructure to be about $50,000 to $100,000. &ldquo;A site with four dispensers is averaging about $175,000,&rdquo; he said.
Retailers are seeing good sales volumes with ethanol blends, Klatt said. &ldquo;I have members that are seeing E15 sales representing anywhere from 25 percent of their fuel sales to 50 percent of their fuel sales.&rdquo;
The work doesn&rsquo;t stop once the fuel is available the gas station, O&rsquo;Brien added. Growth Energy helps with things like signage and, even more critical, training staff to talk to consumers about the fuel and other education efforts. &ldquo;There&rsquo;s some work to make sure the consumers are comfortable with the fuels and they know where they are at and which hose they should be selecting when they pull up with their cars,&rdquo; he said. &ldquo;So there&rsquo;s still a little bit of the marketing work after the pump is installed. Once we get through that and things start rolling, things tend to blossom after that. That is where ethanol will win, in my opinion, every single time. Once that consumer is comfortable, they will pick us nine times out of ten, versus other fuels at that location.&rdquo; For part two on this topic, see <a href="http://www.ethanolproducer.com/blog/article/2015/05/blog-adding-e15-and-e15-only-at-a-retail-station" target="_blank">Adding E15 and E15 only at a retail station.</a> This option offers retailers the ablity to sell E15 without putting in new equipment or spending a lot of money.&nbsp;

Another reader question prompted this week's blog. This time it was a gas station owner, whose family has been in the business since 1922, asking about the cost of E85-compatible tanks. 

Blog: What does it take to get E15 at a retail station?

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